"Informal" Credit Systems in Fishing Communities: Issues and Examples from Vietnam

Abstract

Exemplification of informal credit and local financial systems since the 1940s has discredited the assumptions that these either do not exist or, if they do, that they impose harsh conditions on borrowers. Nevertheless, those erroneous ideas remain tenacious. A sample of 403 marine fisheries stakeholders in five provinces of Vietnam demonstrates that, lacking collateral acceptable to the formal sector, fisheries households depend on the informal financial system. Credit is pieced together generally from several formal and informal sources to finance fishing boats and operations. Credit demand and supply in capture fisheries communities still requires comprehensive examination, especially for countries like Vietnam, for which this is the first study. The role of informal credit systems is examined, the associated patron-client relationship revisited, and additional research needs suggested. Research on financial systems should be broad and integrated, focusing on the varied interlocking contexts of individuals and institutions and aimed at transcending misconceptions like the dichotomy between formal and informal.

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