The financial market: the compatibility of a state bank and a decentralized credit system in the Joncs plain in southern Vietnam.

Abstract

In the context of the transition towards a market economy and the re-establishment of family farms as the main unit of agricultural production, Vietnam is looking for ways of financing small-holder farming. Modem Vietnam is well serviced by productive and efficient institutions. The Banque agricole, in particular, is extremely dynamic but it cannot provide for ail the credit requirements. It has its own limits of profitability, risk management, personnel, and priorities set by senior management. The rural financial market is not yet saturated and private lenders continue to lend money. However, they have had to reduce their interest rates to compete with the formal sector, where interest rates have dropped significantly in recent years. The emergence of new-comers such as foreign non-governmental organizations has had a significant impact. The example of the credit system, coordinated by the ISA/FOS/DTM project and the non-governmental organization FOS in the Mékong delta, demonstrates that it is possible to develop an alternative credit system with considerable scope, a target population, and methods that complement those used by the Banque agricole. This complementary approach has been appreciated by the banking community and should be developed.