MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY - - VU DUC CAN This thesis is PREFERENCES, completed at University Economics Ho Chi RISK SOCIALof CAPITAL, AND Minh City MICROCREDIT RISKS: AN EXPERIMENTAL STUDY IN THE DELTA Supervisor 1: Assoc Prof.MEKONG Dr Truong QuangREGION Thong OF VIETNAM Supervisor 2: Dr Nguyen Duc Quang Major: Finance – Banking Reviewer 1:…………………………………………….……… Code: 9340201 Reviewer 2:…………………………………………….……… Reviewer 3:…………………………………………………… SUMMARY OF DOCTORAL IN The thesis will be defended in front of UEHTHESIS thesis evaluation ECONOMICS committee at …………….……………………………… ……………………………………………………………… ………………………………………………………………… … At HOCHIMINH CITY, 2019 (hour) (date) (month) (year) The thesis can be found at: ………………………… ……… ………………………………………………………………… … …… ABSTRACT The aim of this study is to empirically analyze social and demographic factors related to microfinance borrowers in order to measure their effects on microcredit risks as undergone by microfinance institutions (MFIs) in the Mekong Delta Region of Vietnam Further, the study looks at risk preferences, social capital, and others with respect to microfinance borrowers’ behavior to estimate their impact on microcredit risks facing MFIs In this study, a series of economic experiments was conducted with the participation of microfinance borrowers in six provinces of the Mekong Delta Region to capture the effects of risk preferences and social capital on microcredit risks, which was well justified by the findings Specifically, those who seek more risk are less likely to have bad debt, while those being more risk averse suffer more Given social capital, mutual support in the community and trust impact positively on microcredit risk These results form a firm basis for devising feasible policies in direct relation to microfinance lending activities involving MFIs Keywords: microfinance, risk preferences, social capital, risk seeking, risk averse Chapter 1: INTRODUCTION 1.1 Problem statement Microfinance has come into existence and gone through a long history of development, thus establishing its significant role and influence on economic growth in general and poverty alleviation in particular Vietnam, however, has seen its advancement only recently, and activities of formal MFIs are still limited According to the State Bank of Vietnam (SBV), up to late 2018, there have been 16 financial firms, among which six are subsidiaries of a few banks The current period has seen a boom in financial companies in Vietnam to exploit the untapped consumer lending segment, which has yet to satisfy market needs According to an SBV’s report, by the end of 2018, the total outstanding loans of the entire economy reached around VND7.2 million billion, and the aggregate informal outstanding loans accounted for more than 20% Nevertheless, the supply of formal credit has not well met people’s needs, especially small loans or those without collaterals, thus resulting in the growing demand for illegal lending, literally known as ‘black credit’, which made inroads into socioeconomic well-being Hence, addressing the issue of risks as well as the impact of microcredit risks on microfinance activities is urgent and essential to the current context of Vietnam 1.1.1 Risk preferences and microcredit risks In this study microfinance is understood as small loans (no larger than VND100 million), and microcredit is one of the services offered by MFIs As such, microcredit is a lending product in credit activities as conducted by credit institutions; it is a predominant service provided by MFIs in Vietnam The prospect theory, developed by Tversky and Kahnerman, suggested that the value function is determined by gains and losses in relation to the reference point Wen et al (2014) concluded that risk preference is related to attitudes toward risks Thus, it is evident that risk preference is a tendency toward risk decisions as can be made by individuals and investors to obtain the highest possible profitability Handa (1971) argued that risk preference is the choice between a high-risk asset and low-risk asset to gain higher returns Charness et al (2013) and Eckel et al (2010) concluded that in economics emphasis can be put on suggestive methods in analyzing risk preferences, and the suggested preferences can be affected by the measures used According to Stiglitz and Weiss (1981), borrowers are motivated, and have a tendency, to invest in risk-ridden projects This means that borrowers with bad debts are willing to take high risks The experiments carried out by Zeballos et al (2014) showed that borrowers having no bad debts demonstrate more risk-seeking behavior than those with bad debts Stiglitz and Weiss (1981) hypothesized that people investing in less risky projects are those suffering bad debts The poor cannot repay their loans because they refuse to face risks, so the effectiveness is low (Zeballos et al., 2014) In Vietnam, Vieider et al (2013) concluded that farmers are on average risk neutral and that income is negatively associated with risk aversion The studies of Nguyen et al (2016) and Tanaka et al (2010) in northern and southern villages accentuated the impact of risk attitudes and risk and time preferences on trust and reliability, and risk aversion and patience So, which specific behavioral characteristic of microfinance borrowers has influence on microcredit risks? Do risk preferences differ in microfinance practices between rural and urban regions? These are also the research gap for this paper to fill 1.1.2 Social capital and microcredit risks To date social capital is regarded as a real form of capital and thus substantially influences microcredit risks Trust and reliability are two major concepts embedded in personal social capital, and social capital takes a crucial part in different fields in an economy and society Still, how does it manifest itself and in what way would it be measured when it comes to the issue of risk in microfinance activities? This also receives special attention in this study 1.2 Research topic In Vietnam there has yet to be any comprehensive, systematic research that examine risk preferences and social capital with their effects on microcredit risks as well as the progress of microfinance activities in Vietnam Risk is commonplace in decision making processes, and risk preference is measured by the level of risk tolerance of a single individual From this respect, this study is to be carried out with the title “Risk preferences, social capital, and microcredit risks: An experimental study in the Mekong Delta Region of Vietnam” 1.3 Research objectives The principal objective of this study is to examine the effects of microfinance borrowers’ behavior on microcredit risks in the Mekong Delta Region As such, through data collection and analysis derived from field experiments, the study identifies the extent to which behavioral factors such as risk preference and social capital, along with other social and demographic factors inclusive of the difference between rural and urban borrowers, have effect on microcredit risks To obtain the informed objective, the following questions are to be brought up: (i) How borrowers’ risk preferences and other social, demographic factors affect microcredit risk of MFIs? and (ii) How borrowers’ social capital and other social, demographic factors influence microcredit risks of MFIs? 1.4 Research methods Several research hypotheses are proposed based on the review of related literature and relevant theoretical framework as well as the results of previous studies Field experimental method is adopted to collect the data Regression analysis with Binary Logistic is performed to process the data, along with the use of Probit technique to test the robustness of the results obtained The results are then screened, discussed, and interpreted to put forward policy implications, and limitations are also outlined as a basis for future research The technique proposed by Eckel and Grossman (2002) is adopted to conduct the experiment of eliciting risk preferences Concerning social capital, the study suggests the Game of contributions to community, and Camerer and Fehr’s (2003) method is employed to investigate trust and reliability 1.5 Research participants and scope - Participants: microcredit borrowers of microcredit providers, including both formal and semi-formal institutions - Scope: A total of 176 microfinance borrowers residing in both rural and urban areas in six provinces of the Mekong Delta Region, namely Kien Giang, Hau Giang, Vinh Long, Tien Giang, Ben Tre, and Long An All six surveys and experiments were undertaken from May through October 2017 1.6 Contributions of the study 1.6.1 Theoretical contribution Selectively applied in this investigation are the three-Game experimental technique suited to the reality of Vietnam as well as the study locations to consider the impact of different factors on microcredit risks in the Mekong Delta Region, and thus to add some theoretical basis on behavioral finance as regards risk preferences and social capital with their diverse effects on microcredit risks in urban and rural areas 1.6.2 Contribution to practice In this study the author draws critical conclusions on risk preferences and social capital that influence microfinance activities Those who contribute much to the community and who much willingly donate their money to partners are less likely to suffer bad debt, and the reverse is also true When the size of the loan is high, the level of bad debt abates, and no difference can be found in bad debt levels between urban and rural areas Further, the study provides policy implications regarding microfinance activities and constructive suggestions as to the advancement of the Vietnam’s microfinance industry at large 1.7 Organization Chapter of the 1: study Introduction Chapter 2: Risk preferences, social capital, and microcredit risks Chapter 3: Research design Chapter 4: Analysis of the effects of different factors on microcredit risks: Surveys and experiments in the Mekong Delta Region Chapter 5: Result discussion and policy implications Chapter 2: RISK PREFERENCES, SOCIAL CAPITAL, AND MICROCREDIT RISKS 2.1 Risk preferences and microcredit risks In human society risk is perceived to exist in all kinds of activities Attitudes of people toward risk remarkably differ; therefore, it can be used to speculate on their economic behavior and decisions The impact of risk is direct and diverse, from borrowers’ behavior and activities to investment, manufacture, and consumption and behavior toward risk Other effects arise from demographic, financial, or physical factors and social capital 2.1.1 Prospect theory As the basis for behavioral science, Tversky and Kahnerman (1979) with the prospect theory posited that people sometimes show either risk aversion or show risk seeking tendencies depending on the nature of the prospects (Ackert & Deaves, 2013) Tversky and Kahneman’s theory centered around these fundamental points: (i) In the light of the nature of the prospects, human behavior sometimes implies not just risk aversion (risk avoidance) but sometimes risk loving (risk seeking) People’s choices, thus, are made on the basis of gains and losses; (ii) A person assesses gains and losses against a reference level, which normally corresponds to his current condition; and (iii) People will likely lose because the loss impacts more powerfully on their emotions than the gain 2.1.2 Risk preferences in microfinance lending activities The credit market is imperfect, and always reflects an asymmetry between borrowers and lenders Stiglitz and Weiss (1981) argued that borrowers with bad debts are willing to risk getting high-interest loans According to Zeballos et al (2014), borrowers without non-performing loans seek more risk than those who have Eckel and Grossman (2008) found that female students are more risk averse than their male counterparts While Binswanger (1980) detected no difference in risk compared to the scope of investment between the rich and poor, Vieider et al (2015) showed that unmarried people are less risk averse, whereas women and the elderly are more risk averse In brief, studies on risk preferences concern a wide range of subjects and areas The results also indicated many differences in subjects, areas, and fields of study However, the impact of risk preferences on risks involving microcredit lending and microfinance activities in Vietnam has not been studied at length So, how risk preferences as well as other social, demographic factors of microfinance borrowers affect the risks in microfinance lending activities of credit institutions engaging in microcredit lending and MFIs? 2.2 Social capital and microcredit risks 2.2.1 The role of social capital Social capital is seen as a kind of capital Social capital is a comparatively sustainable social network, exhibiting itself with sympathy, understanding, and interaction among members (Bourdieu, 1986; Fukuyama, 2001, 2002; Coleman, 1988; Portes, 1998) According to Karlan (2005), social capital of an individual is the ability to obtain information, their communication, and social relations to get to grips with imperfect information-related problems Economists held that trust is a critical constituent of social capital As revealed by Karlan (2005), the more faith people have in others, the more economical they are; the more reliable they are, the less credit risk they are exposed to, and the more level between urban and rural areas The number of household members with employment history does not make any difference to bad debt, and neither loan terms 4.3.3 Regression results of the effects of different factors on bad debt in Trust Game At 10% significance level, the results are as follows: • Those who give more money to their partners will less likely have bad debt • Considering merely the effects of age and gender, these are not attributed to bad debt • The higher the education level of a participant, the less likely he bears the burden of bad debt For young people, more advanced age is associated with less bad debt Still, the older a participant becomes, the more likely he suffers bad debt • Larger loans have a link with less bad debt suffered No substantial conclusion can be drawn with respect to the difference in bad debt level between urban and rural areas The number of household members with employment history does not make any difference to bad debt, and neither loan terms 4.3.4 Regression results of the effects of different factors on bad debt by combining Risk Game and Public Goods Game At 10% significance level, the results are as follows: • Age, gender, and education level all have no impact on the likelihood of having bad debt • Larger loans have a link with less bad debt suffered No substantial conclusion can be drawn with respect to the difference in bad debt level between urban and rural areas The number of household members with employment history does not make any difference to bad debt, and neither loan terms 4.3.5 Regression results of the effects of different factors on bad debt by combining Risk Game and Trust Game At 10% significance level, the results are as follows: • Considering merely the effects of age and gender, these are not attributed to bad debt • The higher the education level of a participant, the less likely he bears the burden of bad debt For young people, more advanced age is associated with less bad debt Still, the older a participant becomes, the more likely he suffers bad debt • Larger loans have a link with less bad debt suffered No substantial conclusion can be drawn with respect to the difference in bad debt level between urban and rural areas The number of household members with employment history does not make any difference to bad debt, and neither loan terms 4.3.6 Regression results of the effects of different factors on bad debt by combining Public Goods Game and Trust Game At 10% significance level, the results are as follows: • Age, gender, and education level all have no impact on the likelihood of having bad debt • Larger loans have a link with less bad debt suffered No substantial conclusion can be drawn with respect to the difference in bad debt level between urban and rural areas The number of household members with employment history does not make any difference to bad debt, and neither loan terms 4.3.7 Regression results of the effects of different factors on bad debt by incorporating all three experiments At 10% significance level, the results are as follows: • Considering the effects of different factors on bad debt concurrently by combining the three games, the cumulative regression results reflect similar issues to those of separate regressions • Age, gender, and education level all have no impact on the likelihood of having bad debt • The higher number of household members with employment history, ceteris paribus, means the greater likelihood of a person having bad debt Furthermore, the larger the loan size, the less likely a participant has bad debt Accordingly, with the presence of characteristics of households and loans (notably loan size), the percentage of employed household members and loan size have statistically significant effects on the likelihood of having bad debt when the three experiments are considered Importantly, no substantial conclusion can be drawn with respect to the difference in bad debt level between urban and rural areas and in terms of loan terms 4.4 Robustness check: Using Probit model to analyze the effects of different factors on bad debt From the regression results, it is evident that all the variables in the experiments have negative and statistically significant impacts on bad debt (considering both separate and combined effects) Even though the demographic variables reflect some deviations from the Logit regression results, these are not significant Thus, the Logit regression results for the study experiments are found to be reliable and robust Chapter 5: RESULT DISCUSSIONS AND POLICY IMPLICATIONS 5.1 Summary and result discussions In studying participants’ behavior in each experiment, the results show that the hypotheses proposed are all accepted Concerning microcredit lending practices of formal MFIs, the credit quality is high at large (the percentage of participants suffering bad debt is rather low—18.2%) This is because the loan size is small (VND23.58 million on average); the loans were granted to the poor and the disadvantaged in rural and/or substandard areas, and most were unsecured loans (62.5%)  Risk averse participants: Completely risk averse participants (Scenario in Risk Game) account for the lowest percentage (6.3%), and the percentage of those in urban areas is higher than in rural areas (10.8% and 3.6%) These people are seemingly trustworthy (suffering no bad debt) given microfinance loans from the view of Zeballos et al (2014) According to Stiglizt and Weiss (1981), however, those truly have less NPLs are risk loving, adventurous individuals, and borrower are incapable of repaying the loans because they tolerate no risks Further, the regression results suggest that the percentage of bad debt sufferers belonging to the group of completely risk averse participants is higher than risk seeking individuals (Scenario 6— 35.4% vs 8.2%)  Risk neutral participants: There are considerable differences in bad debt between risk neutral (Scenario 5) and less risk averse participants and also between risk neutral and risk seeking participants No differences are found between risk neutral and highly or completely risk averse participants This implies that bad debts as suffered by risk neutral participants and highly averse participants not normally differ Bad debts suffered by risk neutral participants differ from those explored among others whose risk seeking levels become higher For rural areas, the percentage of completely risk averse and risk neutral participants is quite high (37.8%), which indicates that microfinance lending in rural areas is relatively more secure than in urban areas  Risk seeking participants: The results show that risk seeking participants (Option 6) and risk averse ones (Scenarios 1-4) account for 27.8% and 65.9%, respectively Significant differences in bad debt, therefore, can be concluded between risk seeking and completely risk averse participants, between risk seeking and highly risk averse participants, and between risk seeking and relatively risk averse participants Levels of bad debt not differ between risk averse and less risk averse participants This demonstrates similarities of bad debt levels shared between risk seeking individuals and those who incline more to risk aversion The percentage of risk seeking participants residing in urban areas is high (32.3%), compared to those in rural areas (25.2%), implying that risk seekers in urban areas are more likely to have bad debt than their counterparts in rural areas, but the likelihood is low  Factors of social capital:  There exists a difference in bad debt in Public Goods Game; most participants who donate money have no bad debt, and conversely, those who not are found to have In Trust Game, on the other hand, those without bad debt gives more money to their partners than those having bad debt Those who have great credibility or a wide circle of acquaintances (the authorities, unions, and many others) are well aware of their duty to repay the loans  The factors of age, gender, and education level have no significant influence on the likelihood of having bad debt With loan size as a factor to be further considered, education level does impact profoundly on the increased likelihood of having bad debt when it comes to concurrently examining the three experiments Larger loans apply to less bad debt, which can be attributed to the fact that borrowers with efficient business operations are more capable of repaying the loans and risks consequently lessen  Normally, microfinance loans offered by MFIs have terms and rather flexible repayment options (daily, monthly, quarterly, etc.), so customers have many to choose, depending on their production and business cycle Therefore, the statistics show that there is no difference in bad debt according to loan terms  The average household size is 4.5 people, and this is also one of the main culprits of poverty in rural areas in the Mekong Delta The State, thus, need tailor programs educating people in remote rural areas about population trends to raise their awareness of controlling birth rates to ameliorate their families' lives 5.2 Policy implications 5.2.1 For MFIs and those with microfinance practices:  Concerning microcredit risk, it is necessary to take notice of borrowers’ attitudes and behavior in order to screen out unsuitable ones, and also to consider whether to work with risk seeking or risk averse individuals Risk loving customers, in effect, are energetic and competent at their work On that basis, MFIs and those with microfinance practices can devise particular policies and strategies that can be applied appropriately to different types of customers or can inspect them closely to avoid risk and gain business efficiency  For small loans, customers’ education level has no impact on the issue of bad debt For large loans, however, this factor is a noteworthy issue and has a significant effect Thus, when it comes to selecting the appropriate for large loans, it is imperative to take into account the education level of borrowers to refrain from risks and maintain efficiency  Mutual support in the community, together with trust and reliability, has a positive impact on microcredit risk Microfinance organizations, therefore, should collaborate closely with social unions or women’s or veterans’ associations to serve as a link with these to most effectively preserve and advance those positive values  Customers' personal reputation is the next important factor in limiting microfinance risk Notably, those who work for government agencies, unions, religious institutes, and so forth may scarcely be in breach of credit contracts and may reveal no bad debt in the light of their honor and self-esteem in the society and community Therefore, this type of borrowers must come to microfinance organizations’ notice to be granted appropriate loan packages  MFIs are to perfect the operational apparatus, sharpen management capability, professionalize operations, and possess powerful resources Besides, activities and products must be further diversified to meet the actual needs of people, especially those residing in remote rural areas  Apropos microfinance borrowers, is the issue of subsidies or interest rate aid growing necessary? Through the results of the survey on microfinance borrowers, they are, in reality, less interested in this very issue, especially with respect to small loans What does matter is the service quality of MFIs as well as credit institutions engaged in microfinance activities Therefore, a variety of products should be designed in accordance with rational interest rates to ensure that customers can actively pick what to suit their business conditions for consequential benefits enjoyed by both sides  For large-sized or formal MFIs, urgent attention ought to be paid to both risk and financial management, especially when scope of operation, networks, and types of products are broad and varied Enhancing administration capacity is indispensable to secure and efficient operations  Only recently has Fintech made its way to Vietnam, but it has progressed rapidly and made its mark on the efficient and sustainable development of banking and finance industry Thus, consideration should be given to staff recruitment and training to respond duly to the requirements set in such a new technological era 5.2.2 For Vietnam Government and State Bank:  Regarding policies:  For the microfinance industry to develop in a stable, sustainable, and effective manner It is important to complete the legal framework on microfinance practices in Vietnam Favorable policies should be devised for semi-formal MFIs that are now operating at higher costs than formal ones  Operating capital sources are pivotal to microfinance organizations Hence, there must be policies and mechanisms on capital support or re-lending from low-cost capital sources offered by foreign institutions such as WB, ADB, IFC, and so on for instant back-up given to them in case of unexpected incidents A small portion of funding from national programs on poverty alleviation can be provided to aid MFIs in need  Given small-scale, newly established MFIs, there ought to be preferential schemes on corporate income tax, land allocations, and infrastructure development to facilitate these in involving themselves further in microfinance activities  SBV is to consider motivating commercial banks to offer loans at favorable interest rates to MFIs  For microfinance loans, as shown by the customer survey, high lending rates have little effect since these loans are small On the other hand, due to the relatively high operational costs facing MFIs’ lending activities, SBV should devise a reference framework of higher lending rates for MFIs than those for credit institutions Also, it is advisable to encourage MFIs to introduce a wider lending rate range than that of commercial banks that suits every type of loan package favorable to both MFIs themselves and borrowers Under present-time fierce competition, for more effective deposit mobilization, MFIs should be allowed to bring into force higher interest rates than other credit institutions  Further solutions:  Training sessions on corporate administration and professional skills are to be arranged for the management of MFIs and their staff in accordance with updated standards and novel insights for practical application to their operations with further efficiency  There is growing need to transform semi-formal MFIs into formal ones, of which the operations feature increasing professionalism under SBV’s supervision Legal procedure for granting business licenses must be simplified to facilitate the establishment and development of MFIs  Intensive support should be given to real-world updated technology training amid the context of Fintech’s intrusion and rapid advancement in Vietnam This will condition MFIs to have access to new technology which helps them operate more effectively and allows reduced costs and increased profits CONCLUSIONS By surveying extant literature on domestic and international microfinance and analyzing actual data and statistics on the development of Vietnam’s microfinance industry as well as field experiments conducted to shed some light on the issue under discussion, the author has arrived at several substantial conclusions relating to the effects of risk preferences and social capital on microfinance practices From this, important implications are put forward given activities of microfinance institutions as well as the State Bank of Vietnam (SBV), and these are expected to encourage the sustainable and striking advancement of the microfinance sector in coming years In Vietnam, microfinance is perceivably quite a new domain, and microfinance institutions involved in providing services and customers having a chance to get access to it are limited from many aspects Despite the current economic recession and hardships confronting the system of credit institutions, Vietnamese MFIs’ growth rate is maintained as regards properties, capital sources, and outstanding loans The modes of their operations, furthermore, are both increasingly stable and more professional along with secure, efficient administration guaranteed Still, MFIs have their discrete operations, reflecting a lack of connections while the legal framework does not genuinely support access to resources to expand their services Formal MFIs have hitherto been enjoying access to capital sources from savings deposits of the people and their members, loans from commercial banks, organizations, and individuals in the country and others, as well as non-refundable funding sources However, limited capabilities to meet micro loan demands still remain There are currently two distinct trends revealed by the microfinance system in Vietnam First, small- and medium-sized MFIs endeavor to accumulate experience in enlarging their size, restructuring their businesses to expand operations and attract more customers Second, large-sized MFIs also attempts restructuring, devising operational models toward professionalism to prepare themselves for transformation into formal organizations The factors that influence the development of microfinance comprise both internal (micro) and external (macro) ones The legal framework has fundamentally laid a concrete foundation and institution to sustain the growth of microfinance in Vietnam However, the policy environment is still lacking in concentration, synchrony, and consistency Some regulations on the operations of microfinance institutions detailed similar issues as can be applied to commercial banks, and so are not fully compatible with the specific activities of MFIs, especially given preferential policies and incentives for them For those reasons, secure, effective, and sustainable development requires that MFIs focus specifically on improving facilities, administration capability, risk management, capital sources, information technology, and human resources Additionally, the Government and SBV should early put into effect a comprehensive legal framework besides rules and regulations appropriate for effective management and facilitation of MFIs’ operations and their service and/or product supply Only by doing so can the demands for microfinance capital be satisfied from the poor in rural, mountainous, island, and disadvantaged areas  Limitations and suggestions for further studies: Microfinance activities have emerged as a prominent issue receiving undivided attention of the State, SBV, and microfinance organizations as the market's demand for microfinance borrowing is enormous while supply sources have yet to satisfy it Microfinance practices contribute significantly to alleviating poverty, creating jobs, and improving the living standards of a large number of poor people in, remote, isolated, or disadvantaged areas Hence, research on microfinance activities is indispensable so that the Government and relevant agencies can work toward additional solutions and measures to facilitate efficient microfinance business that meets the growing need for microfinance loans and militates against the present-time widespread crime of "black credit" Due to funding constraints and a short time span, experiments were conducted solely at six provinces in the Mekong Delta Region, and as a result of the data sample of 176 participants in the research, the results cannot thoroughly address the informed issue under consideration To date, prevailing views have differed significantly on the definition and classification of social capital Primarily dissected in this study are the factors of trust, reliability, and contribution to community with their effects on microfinance lending practices, while others, such as time and costs, have not been pondered Future studies, if any, are thus recommended to extend the scope that covers many more areas (e.g., Central, Northern regions of Vietnam) or to diagnose the similar issue by looking at some other elements of social capital, specifically taking into account the following: 1/ Does the geographical difference account for the effects of risk preferences and social capital on microcredit risk? 2/ Does the difference in regional culture result in the effects of risk preferences and social capital on microcredit risk? 3/ Does religion as another factor under consideration exert an impact on microcredit risk? 4/ How such factors as social relations or relation to local authorities affect microcredit risk? 5/ Supposed that people become wealthier and are under no financial pressure, will they be inclined to be more economical and thus more risk averse? Are there any negative associations that reject the study hypotheses? Those issues are to be considered for more conclusive evidence of the associations among risk preferences, social capital, and microfinance practices in Vietnam  LIST OF RELEVANT PUBLICATIONS Truong Quang Thong & Vu Duc Can (2017) Microfinance in Vietnam: Reality of practices and policy implications (in Vietnamese) Industry and Trade Magazine, Issue 11, October 2017 Truong Quang Thong & Vu Duc Can (2017) Eliciting risk preferences and social capital via microfinance experiments in Mekong Delta Region (in Vietnamese) Industry and Trade Magazine, Issue 12, November 2017 Truong Quang Thong & other researchers at University of Economics Ho Chi Minh City (2017) Factors affecting microfinance loans repayment: A study in Mekong Delta Region (in Vietnamese) Scientific research project at university level accepted on November 14, 2017 in accordance with Decision No 3290/QD-DHKT-QLKH dated November 2, 2017 Truong Quang Thong (principal investigator), Vu Duc Can (member) and others Social benefits, financial efficiency, and policy and institution issues concerning microfinance practices: Experimental study in Long An Province Scientific research project at provincial level accepted on August 31, 2018 by Advisory Council for Assessment and Acceptance, Long An Province People's Committee Certificate No 09/2018/SKHCN-GCN dated November 1, 2018 by Long An Department of Science and Technology Truong Quang Thong, Vu Duc Can & Pham Tien Dung (2019) Social capital and microfinance risks: An economic experiment in Mekong Delta Region Journal of Banking, Issue 11, June 2019 Vu Duc Can (2019) Risk appetite and microfinance risks: An experimental study at Mekong Delta Region Journal of Banking, Issue 14, July 2019 7/ Quang Thong TRUONG, Quang NGUYEN, Duc Can VU et al (2019) Linking risk preferences with microfinance default: Evidence from a field experiment Review of Behavioral Economics No … (Prior Acceptance by email dated 16-9-2019 attached as evidence)  ... and microcredit is one of the services offered by MFIs As such, microcredit is a lending product in credit activities as conducted by credit institutions; it is a predominant service provided... microcredit borrowers of microcredit providers, including both formal and semi-formal institutions - Scope: A total of 176 microfinance borrowers residing in both rural and urban areas in six provinces... Risks in microfinance practices  Objective risks: natural environment, socio-economic environment, legal environment  Subjective risks: ⁕ MFIs: administration capacity, lending procedure and