Skip to Content

UNU-WIDER Logo

30 Years of economics for development

WP/039 Social Capital, Network Effects and Savings in Rural Vietnam

Information failures are a major barrier to formal financial saving in low income countries. Households in rural communities often lack the information necessary to set up formal deposit accounts or are uncertain about the returns to saving formally. In this paper, we explore the extent to which social networks in rural Vietnam can play a role in increasing formal savings where knowledge gaps exist. Networks are defined as active membership of women’s unions and the quality of networks is measured by the level of formal savings observed among group members. We find that membership of high quality networks leads to higher levels of saving in formal financial institutions and to higher levels of saving for productive investments as compared with other precautionary or lifecycle motives. Our results suggest that transmitting financial information through formal networks could be effective in increasing formal savings at grassroots level. We also conclude that ensuring information disseminated by networks is both accurate and desirable as well as important given that behavioural effects are also found in low-quality networks.
Publisher:
UNU-WIDER
Series:
UNU-WIDER Working Paper
Volume:
2012/39
Title:
WP/039 Social Capital, Network Effects and Savings in Rural Vietnam
Authors:
Carol Newman, Finn Tarp and Katleen Van Den Broeck
Publication date:
April 2012
ISBN 13 Web:
978-92-9230-502-4
Copyright holder:
© UNU-WIDER
Copyright year:
2012
Keywords:
household savings, social capital, information failure, women’s unions, Vietnam
JEL:
D14, D71, D83, O12
Project:
New Approaches to Measuring Poverty and Vulnerability
Sponsor:
UNU-WIDER gratefully acknowledges the financial contributions to the research programme by the governments of Denmark (Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development).
Format:
online
Back to Top

^ Back to top

1995-2014 United Nations University - World Institute for Development Economics Research

© CC BY-NC 4.0Disclaimer | Terms of Use
UNU-WIDER, Katajanokanlaituri 6 B, FI-00160 Helsinki, Finland
Tel: +358(0)9 6159911 | Fax: +358(0)9 61599333
mail: wider@wider.unu.edu/firstname.lastname@wider.unu.edu