Policy credit and income inequality reduction in Vietnam: An empirical analysis

This paper examines the role of policy credit on income inequality reduction in Vietnam. We also examine whether the impact of policy credit on income inequality is conditioned by the educational level and institutional quality. The primary data set contains a panel of 60 provinces collected from the General Statistics Office of Vietnam from 2002 to 2016. We employ the Generalized Method of Moment (GMM) to solve the endogenous problem. The empirical findings show that policy credit contributes to reducing income inequality in Vietnam. In addition, we provide evidence that the institutional quality and educational level condition the impact of policy credit on income inequality. Based on the findings, the paper implies that the government needs to coordinate with the relevant functional agencies to promote the propagation and dissemination of preferential lending programs for the poor, ethnic minority groups. (C) 2020 The Authors. Published by IASE.