accessibility to bank credit of mandarin orange growers in vinh hao commune ha giang province

THAI NGUYEN UNIVERSITY UNIVERSITY OF AGRICULTURE AND FORESTRY TRIEU TIEN MANH ACCESSIBILITY TO BANK CREDIT OF MANDARIN ORANGE GROWERS IN VINH HAO COMMUNE, HA GIANG PROVINCE BACHELOR THES

INTRODUCTION

Research rationale

In Vietnam, the cultivation of perennial plants including fruits has always been playing a key role in the economy According to the report of the General Statistics Office of Vietnam in 2021, the total area for perennial plants has increased in recent years, reaching 3,688.6 thousand hectares in 2021 and higher than that of 2020 by 72.3 thousand hectares Fruit trees account for approximately 30% of that total area In the future prospects of many provinces such as Binh Dinh, Ha Giang, Soc Trang, and Vinh Long, fruit trees are going to be the primary economic production

With such increases in terms of cultivation area, production, and profit, the position of perennial plants in the Vietnamese economy will definitely be further elevated in the future Nevertheless, the process of cultivating and nurturing plants, even harvesting and consumption requires a huge amount of finances that a household alone could not afford (Kumar et al., 2015) That is why bank credit is needed to support perennial plants in particular and the national economy in general Unfortunately, the access of people to bank credit often undergoes many complicated protocols from application to final approval Specifically, during the application for bank credit, collateral is mandatory However, it may create difficulties due to an imbalance between the credit and the value of the collateral, or people are afraid and unwilling to offer collateral (Ioannidou et al., 2022) There are many different types of fruit plants that are highly considered for their role and contribution to the economy Corresponding to each type, the level of requirement toward bank credit for investment and cultivation varies profoundly, leading to the variety of demands for bank credit Furthermore, the socioeconomic conditions of a particular region also pose significant effects on bank credit accessibility Therefore, studies evaluating bank credit of a certain group of interest are crucial to comprehend all the aspects, then using the findings to contribute to the understanding of production households and the development of economics

As one of the main crop in fruit tree production, mandarin orange has always had a firm position among fruit trees in particular and in the entire economy of Vietnam, in general Furthermore, the crop is also the livelihood of thousands of households and could be potential for many others However, growing mandarin orange comes with significant investment in cultivation techniques, labor forces, fertilizers, and supporting materials (Sudhakar & Sarker, 2013; Tran Thuy Ai Dong et al., 2017) As a result, accessing bank credit for financial support is inevitable In fact, there are many reports on credits accessed for orange cultivation from the Vietnam Bank for Agriculture and Rural Development in recent years That is why a start with mandarin orange, particularly with the bank credit accessibility of grower households will surely provide valuable insights, creating much-needed foundations for scientific research on credit accessibility of other regions and other types of fruit trees Furthermore, it will potentially resolve difficulties in accessing bank credit for the region as well as the operational system of bank credit from financial institutes Comprehending that Vinh Hao Commune in Ha Giang Province is a large and prominent cultivation area for mandarin orange, this project has selected the place and decided to conduct a case study on “Accessibility to bank credit of mandarin orange growers in Vinh Hao Commune, Ha Giang Province”.

Research objective

This study aimed to 4 specific objectives as follows:

1 Evaluate the overall natural conditions and socio-economic status of the research area to point out correlations with credit accessing

2 Assess the status of credit providing to mandarin orange growers in Vinh Hao Commune – Ha Giang Province

3 Synthesize the factors affecting credit accessibility of Mandarin Orange growers via survey results

4 Evaluate the advantages and disadvantages or strengths and weaknesses of bank credit accessing in Vinh Hao Commune, then propose directions for exploiting the advantages and solutions for resolving the challenges.

Research questions and hypotheses

This study had set the research questions and hypotheses as follows:

• Question 1: Why are mandarin orange growers in Vinh Hao Commune struggling to elevate their livelihoods and incomes, enlarge the production scale, and develop the mandarin orange products to further extends?

The fact that Mandarin Orange in Vinh Hao Commune possesses great qualities in terms of nutrition and sensory, yet remains relatively limited in not just the Vietnamese market but also the world sets out this question It comes with the hypothesis of whether bank credit play any significant role in this scene

• Question 2: What are the relationship between Agribank credit and Orange Mandarine growers in Vinh Hao Commune, Ha Giang Province?

As bank credit are extremely important in circulating the capital and providing means to agricultural practitioners for development, it is necessary to first apprehend the situation of providing bank credit as well as accessing the capital for agricultural production The hypothesis coming along with this question is that there are drawbacks and disadvantages in this matter in Vinh Hao Commune

• Question 3: What are the features in bank credit accessibility of Mandarin Orange growers in Vinh Hao that need improvement?

The hypothesis is that there are features in banking operations, attitudes of people, and policies from the authorities that impede bank credit accessibility in Vinh Hao Commune.

Limitations

+ Time and scale: A study on bank credit accessibility requires much in terms of time and scale in order to fully comprehend the situation of a region (Vinh Hao Communes) That is due to the vast population and the large area of territory that the study chose to cover Consequently, the limited time led to certain methods to comply with the requirements Nevertheless, it might also have led to some shortcomings in the information coverage of this study Primary data was collected in 2023, while secondary data was collected for the period 2019-2022

+ Research capabilities: The practitioners of this research have certain limitations in terms of knowledge and research prowess This likely led to research risks and errors Despite risk management methods, there are definitely aspects that need to be elaborated

+ Unorthodox credits: Unorthodox credits refer to the loaned capital that people do not acquire from banks or official credit services but instead from other people, family and relatives, and even dark credits This plays a significant role in Vietnam and was shown in some studies to affect bank credit accessibility and the operation of credit services This study has yet to cover this aspect as either an influential factor or a feature parallel to bank credit, which needs research and examination.

Definitions

+ Credit service: refers to a range of financial activities and offerings that involve the extension of credit or loans to individuals, businesses, or entities These services often include assessing creditworthiness, setting credit terms, and providing access to funds with the expectation of repayment over time, typically with interest They can be provided by banks and various forms of financial institutions

+ Bank credit quality: refers to the assessment of the risk associated with the loans and credit assets held by a bank It indicates the likelihood that borrowers will fulfill their repayment obligations High credit quality implies that borrowers are likely to repay their loans as agreed, indicating a lower risk of default Conversely, low credit quality suggests a higher risk of default and potential losses for the bank

+ Capital: is the financial resources that a company or individual possesses, which can be used to generate income, invest in production, and support various economic activities Captital can come in cash, equipment, property, and investments This is a fundamental component for businesses to operate and grow, as well as for individuals to achieve their financial goals

+ Bad debt: Also called “uncollectible accounts expense”, bad debt refers to the amount of money that a company predicts it will not be able to collect from its customers who have outstanding balances or unpaid invoices This expense is recognized on a company's financial statements as an allowance for bad debts or a provision for uncollectible accounts due to lack of repayment abilities It reflects the company's estimation of the portion of its accounts receivable that is unlikely to be collected due to factors such as customer bankruptcy, financial difficulties, or other reasons The company creates a reserve for these potential losses, which helps present a more accurate representation of its financial health by accounting for the possibility of non-payment

+ Balance: refers to the difference between the total credits and total debits in an account or financial statement If the credits and debits are equal, the account is said to be in balance Balancing accounts is essential for accurate financial reporting.

LITERATURE REVIEW

Theoretical bases of commercial bank credit

According to Cranston et al (2018), credit is an economic concept and it is also a product of the commodity economy, reflecting the borrowing and lending relationship between economic entities based on the principle of timely repayment of both principles and interest, with a purpose and a guarantee for the borrowed money Credit has appeared and existed in many economic and social forms When the private ownership of the means of production appeared, exchange relationships of commodities emerged as well During this period, credit was carried out in the form of borrowing and lending goods - commodities Later, credit shifted to the form of borrowing and lending money (Pham Bao Duong, 2002) Also according to the author Pham Bao Duong, in its original meaning, credit is trust and confidence that lending and borrowing can take place with different types of materials, goods, and money Therefore, credit is not only a regular form of borrowing and lending, but also borrowing and lending with a certain level of trust; that is, when exercising the lending right, the lender trusts in the borrower's ability to repay the debt Broadly speaking, credit is a type of social relationship that reflects economic ties, primarily based on trust

From the perspective that "Credit is the total amount of money deposited by depositors into credit organizations, for which they have control over the converted amount," credit is based on the view that people's savings in credit organizations are the foundation for credit, according to the study of Disemadi in

In Vietnam, bank credit accessibility has been a key concern for policymakers and economists in recent years, as it plays a crucial role in driving economic growth and development The government has implemented various measures to improve credit access, including promoting financial inclusion and developing the credit information system However, challenges remain, including the high level of non-performing loans and the lack of collateral for small and medium-sized enterprises

The classification of credit, especially bank credit, has become extremely diverse Specifically, it can be based on the purpose, the duration, the repayment method, and the characteristics of repayment These methods were mentioned in many studies on Vietnam’s bank credit (Nguyen Thi Lan Phuong, 2015; Nguyen Hai Truong, 2017) In such:

+ Based on the purpose of accessing credit:

-Production and business credit: This form is offered by the bank so that economic entities (individuals or collectives) in industries, agriculture, commerce, transportation, telecommunication and services can obtain the means to reach the production requirement or the business deman

-Customer credit: This form serves the demand of each individuals The demands include shopping, bill fulfilment, and loans via VISA or debit cards

+ Based on the credit term:

-Short-term credit: Credit with a maximum term of up to 12 months, serving short-term production and business capital and expenses

-Medium-term credit: A type of loan from a bank with a term of 1 to 5 years

-Long-term credit: A type of loan with a term of over 5 years to finance the purchase of fixed assets, construction of factories, etc to serve production and business

-Unsecured credit: Banks lend based on the credibility and trustworthiness of the borrower

-Secured credit: The loan is secured by the borrower's assets or guaranteed by a third party

+ Based on the form of the capital:

-Cash: Under this form, the bank employs cash to provide to the borrowers

-Asset-based credit: The form of credit capital provided by the bank is assets, such as hire-purchase credit

+ Based on the repayment method:

-Installment credit: The borrower must repay the principal and interest gradually according to the agreed schedule

-Lump-sum credit: The borrower must repay the entire principal once it reaches maturity

-Repayment on demand credit: A type of bank loan where the collection is made on demand by the borrower based on their ability and within the agreed contract term

+ Based on the repayment nature:

-Direct repayment credit: The bank lends and repayment is made directly by the borrower

-Indirect repayment credit: The repayment is not made directly by the borrower but through the borrower's authorized person

The following schemes of bank credit classification show that a bank can employ various options for providing credit service This helps greatly in serving different groups of customers That is why research on bank credit accessibility will show much-needed information and the credit forms in Vinh Hao Communes that Mandarin Orange growers can access, while simultaneously elaborating on the details of each aspect and thus proposing solutions from a more micro and specialized viewpoint

2.1.3 Characteristic of commercial bank credit

The characteristics of a commercial bank credit typically consist of five features First, the basis for a bank to provide credit services primarily relies on trust in the borrower Conversely, borrowers also have trust in the ability to generate profit and the timely repayment of the principal and interest of the loan Second, fundamentally, bank credit is the transfer of money or assets among multiple parties (depositors, banks, and loan customers) Third, the provision of credit services must come with a specified term, and the loan must be repaid unconditionally The bank itself must adhere to the committed deadlines to ensure its credibility Fourth, the value of the loan must be increased or at least preserved This characteristic is realized through the bank's "interest rate." The institution relies on the difference between principal and interest to generate profits and maintain its operations The final characteristic is the inherent risk in credit activities Some customers have bad intentions and do not fulfill their loan commitments In other cases, loan customers may not create value, leading to an inability to repay debts Additionally, there are many other risks

These mentioned characteristics are the foundation for creating the direction of operations, principles, and procedures for organized banks to provide credit

2.1.4 Principles and conditions for providing bank credit

According to the book “The principles of banking” written by Moorad Choudhry in 2022 , there are 02 big principles that are regularly agreed between the credit providers and the credit borrowers:

+ First, the capital lended by the credit provider must be used precisely in accordance with the purpose agreed in the contract between the loaner and the borrower This principle was set to evaluate the efficiency of capital usage as well as to assess the feasibility of credit provision This is also an important step in enhancing bank credit quality as it affects many important steps in risk management, especially the ones involving overly-focused capital or bankruptcy Any alteration in capital usage is considered a tremendous impact on the benefits of both parties

+ Second, the capital lended by the credit provider must be repaid with both the principal and the interest at the point of time that is agreed between 02 parties The finance or asset lended are actually acquired by the credit provider via borrowing from other parties outside That is why the credit provider also has a duty of repaying in time This requires the borrower repay the capital in accordance with the contract

Along with the 02 principle, there are often 05 great conditions that the borrower must meet in order to be provided with credit capital:

+ The borrower should possess a full legal background: Issues regarding criminal record and the current state of civil background are often used by the credit provider when considering the trustworthiness of the borrower

+ The purpose of capital usage must be legal: Using the credit capital correct to the agreement is a principle but using the credit capital for legal purposes is the condition for credit approval

+ The borrower need to possess an adequate financial ability: The borrower should be able to assert the healthiness of their financial background as well as the ability to manage and develop the asset, which is crucial in debt repayment and reducing bankruptcy risks

+ The direction of investment or production must be feasible and effective: This condition is related to the fundamental principle of profitability, creating values and fortifying the repayment ability

+ The borrowing needs to ensure the borrowed amount according to regulations: Ensuring the borrowed amount as prescribed is a tool to be able to commit to fulfilling the responsibilities and obligations of the customer towards the credit institution This is also a step in creating a 'secondary' payment source for the bank."

2.1.5 The role of bank credit

Bank credit and the capital from them play a substantial role in agriculture as well as the entire socio-economic foundation of a nation Agricultural cultivation often requires great areas of land, which is difficult to exploit properly without a healthy financial basis Other fields also need capital to implement various production activities and create values from that In reality, bank credit have been one of the primary subjects of interest as every nation has proposed and enacted banking laws that affect credit services Furthermore, this tends to be frequently updated For example, during the COVID-19 pandemic, the Vietnamese government approved various new policies for credit services in order to support capital circulation, providing resources for many economic entities (Nguyen Dinh Dap et al., 2021) Amidst the scene of industrialization – modernization in

Vietnam nowadays, the economic relationship between agriculture and bank credit is likely going to face more challenges

For agriculture and remote development, bank credit capital is needed for implementing activities in these fields The role of bank credit is also emphasized in resource distribution as the intermediate, thus contributing to the career of poverty reduction of a whole nation In a more detailed viewpoint, the capital lent by credit providers can help the borrower the mean to purchase the breed, fertilizer, pesticides, and herbicides Consequently, bank credit capital affects dramatically the productivity of agronomy, forestry, and fishery, allowing agricultural households to improve their livelihoods and cultivation methods This resource also facilitates the expansion and diversification of agricultural production via the purchase of instruments, equipment, and production techniques In addition, bank credit may also resolve the labor status that is currently redundant in especially remote areas From that, people can find jobs and thus reduce migration from the countryside to the city

Bank credit accessibility

2.2.1 Overall concept of credit accessibility

Credit accessibility is the degree of ease in borrowing capital from financial institutions This can also be considered a measure of how many options are available to access credit for a group of people, including small communities A high credit accessibility implies having multiple target groups that can borrow capital without being dependent on financial status or circumstances This is a vital aspect in fostering the economy, promoting entrepreneurial enterprises, and enhancing financial inclusivity (Lin et al., 2019) Credit accessibility enables borrowers to expand economic activities and fulfill production requirements Additionally, financial service providers and regulatory bodies frequently implement policies and principles to enhance this aspect

2.2.2 Factors affecting bank credit accessibility

Credit service providers like banks all have principles and conditions for granting loans These often have certain impacts on the accessibility of credit for various target groups Generally, loan repayment involves both principal and interest within the agreed timeframe (Nguyen Duy Tu, 2020) After borrowing, the borrower must also use the funds for the agreed-upon purpose While these aspects can provide clear direction for borrowers, they can also hinder credit accessibility, especially for financially challenged individuals, who might be hesitant about debt repayment

Regarding loan conditions, banks also have rules tailored to specific regions and must adapt to socio-economic conditions as well as culture Conversely, if banks or credit institutions don't research and set appropriate requirements, credit accessibility will face many risks Banks and credit service providers can also have their own lending procedures A credit entity can create favorable conditions for people to access loans Moreover, positive user experiences with lending processes and procedures build credibility, enabling more individuals to access credit On the other hand, complex procedures can make it difficult for people to access credit, reducing the potential for public fund utilization

According to the research by Vo Thi Quy & Bui Ngoc Toan (2014), interest rates and loan amounts are also significant factors in enhancing or limiting credit accessibility These two factors are closely related Specifically, each loan will have a certain interest rate As borrowers always seek lower interest rates, lower rates create motivation for credit accessibility Conversely, people will self- restrict credit access if interest rates are excessively high Additionally, accepting the presented interest rate or not will also affect borrowing decisions Furthermore, these two factors are related to the third factor: loan duration A reasonable loan duration enables more people to access credit and provides an opportunity for credit institutions to promote their services

At credit service organizations, personnel and officials carrying out tasks also have a certain impact on credit accessibility Officials with friendly, warm, and enthusiastic attitudes greatly assist individuals in the process of credit access Guidance from officials plays an important role in helping individuals complete loan application files and procedures Additionally, officials can guide individuals in using the funds after borrowing Borrowers often feel uncertain, making officials the ones to address these concerns

The borrower always needs a demand of a certain amount when accessing bank credit A high amount associated with a feasible direction of capital usage and great economic potential helps increase the loaner’s confidence in providing credit services Conversly, concerns regarding risks after borrowing capital in combination with an ill-conceived plan for money usage would decrease bank credit accessibility

Another important factor generated from the borrower party is the collaterals Nowadays, this is highly considered as one of the most influential factor that affect both the decision of accessing credit and the ability to repay the debt, especially from agricultural households The collaterals that are most widely used include land usage certificate and properties associated with land A collateral may not be strictly related to the required amount of the borrower’s demand

In Vietnam, external factors that influence credit accessibility primarily stem from the state's policy and legal systems as well as those of each locality There are numerous regulations for both lenders and borrowers, along with many policies guiding credit flow to align with the country's direction Localities also have their own regulations to help people borrow and utilize funds in a reasonable and effective manner According to author Quang Khoi Tran (2018), many localities have organized educational classes to disseminate information about credit laws, basic knowledge, and proper credit utilization There are also specialized training sessions, particularly in agricultural practices, to empower individuals to confidently borrow for production purposes However, while positive local influences on credit accessibility are evident, it also implies the potential for negative impacts to emerge

A locality that doesn't invest in policies encouraging people to engage in the economy through borrowing might lead to a decline in credit accessibility Moreover, individuals without information and understanding would encounter difficulties in fund utilization, potentially resulting in losses Another external factor that significantly influences credit accessibility is the local culture In developed regions, people tend to be more receptive to credit services, making credit accessibility easier However, in remote areas where cultural traditions shape daily life and production, people are more inclined to hesitate and self- limit in credit accessibility

2.2.4 Indicators of bank credit quality

The process of bank credit quality control concerns the assessment of creditability as well as possible risks related to the borrower and the credit service provider There are many different indicators that can be used for such a process Those indicators are categorized according to the customer types or the financial media In summary, these following are the most popular indicators:

+ Bank record: The creditability of a borrower can be determined based on the previous transactions or debt repayment in time A healthy bank record along with responsible behaviors can enhance the quality as well as the accessibility of bank credit However, a history with bankruptcy or overdue debts is often associated with risks and thus affects credit accessibility negatively

+ Income and the ratio between income and debt: This is an indicator that is considered essential for a credit service provider to assess the repayment ability of the borrower According to Nguyen Thi Thu Dong (2012), a low ratio of debt/income and a stable source of income, which is certificated, often helps improve the quality of credit services

+ Financial stability and liquidity: These two indicators are reflected via financial statements Adequate liquidity or a firm financial foundation is a basis to create tust between the borrower and the credit provider when accessing credit capital

+ Collaterals or underwriting: According to author Nguyen Duc Thanh (2020) when studying bank credit accessibility in Hanoi, most banks often requires either collaterals or underwriting to reduce or control the risk of bankcruptcy and overdue, from that enhancing the quality of credit services

+ Credit score or credit assessment: Nowadays, there are plenty of credit providers applying the form of scoring customers or economic entities, creating a record This indicator is relatively similar to the bank record indicator when it is also based on the behavior when accessing credit capital A high credit score facilitates credit accessibility On the contrary, a low score leads the customer into the blacklist, impeding bank credit accessibility or even completely neutralizing the opportunity of borrowing money from banks and financial institutions

Research status on bank credit quality and accessibility in Vietnam

Before 2021, studies on bank credit in Vietnam only focused on the nature, the operation, and technical or theoretical aspects Among those studies, the article of Pham Duc & Siriwardana in 2007 is considered illustrious for its clarification of the interests that agricultural households could benefit from when accessing bank credit More specifically, this study gathered information from 301 families from 02 provinces and then employed descriptive analysis and stepwise regression to investigate the factors affecting credit accessibility as well as the regular income of a household Nevertheless, the study also showed that this relationship still depended much on the form of credit service and the purpose of credit access The authors concluded that enhancing bank credit quality would offer many benefits to agricultural households in Vietnam, though the authorities and the regulation system would likely need to invest much effort into individual investigations corresponding to each family’s background

In 2008, the study of Barslund & Tarp had surveyed both orthodox and unorthodox forms of credits in Long An, Quang Nam, Phu Tho, and Ha Tay Province (now a part of Hanoi) This study covered a large scale as it approached more than 900 households and discovered many differences in the usage of orthodox and unorthodox credit capital Moreover, the authors had also compared the differences among the 04 provinces and concluded that geological location could also be associated with credit accessibility This study is one of the primary reasons why researching credits in the countryside needs to be conducted in small localities to avoid presumptuous and forceful conclusions

In 2018, a prominent study with the title of “Factors affecting credit accessibility of remote households in Lai Chau Provinces” conducted by Nguyen Ngoc Anh et al had published many valuable results on studying bank credit quality in the Northern region of Vietnam This article implemented direct surveys to gather information regarding factors affecting the decisions of remote households when it came to accessing bank loans The results showed that factors including household income, the level of education achievement, and collaterals are the most influential The solutions for improving bank credit accessibility included enhancing education facilities in the locality, occupational training, and developing new operational methods for credit services, which focused more on optimization and flexibility in terms of collateral requirements

In 2019, Nguyen Huu Dang & Tran Thi Kieu Tien conducted a study related to credit accessibility, but not specifically targeting farmers Instead, these two authors focused on small business households and demonstrated that the factors influencing this group were quite similar to farmers Specifically, after surveying

140 households in Soc Trang province, this study clearly demonstrated that demographic information such as age groups and education levels, along with the type of collateral assets, were the two most significant influencers As a result, the study proposed ways to simplify the registration process and credit access procedures to address these challenges Additionally, disseminating information and collaborating with other relevant authorities should also be considered

Also in 2019, author Me Van Dung had analyzed the status of credit accessibility of remote households in Son La Province This study concluded that households that cultivated rice in the research area were often impeded in accessing loans due to concerns about collaterals Through surveys, the most feasible approach for this issue was improved propagation when there were 75% of households claimed that they would apply for bank loans if they knew they were qualified Moreover, the banking system in Son La Province was flexible with policies that allow various types of collaterals, including approval via the mere creditability of individuals This is a valuable study for its suitability with the current state of the socio-economy of Vietnam

The mentioned studies and achievements related to the analysis and evaluation of credit accessibility will undoubtedly serve as a reliable foundation and valuable reference material for related research This presents a significant opportunity for future scientific research endeavors.

Production of Mandarin Orange

According to the taxonomy of Barrett & Rhodes (1976), mandarin oranges are a citrus fruit native to Southeast Asia and are also known as "Cam sành" in Vietnamese They are a small, sweet, and easy-to-peel fruit that is relatively popular all around the world, especially during the holiday season Mandarin oranges are part of the Rutaceae family and are classified as Citrus reticulata Mandarin oranges grow on evergreen trees that can reach up to 6 meters in height These trees have glossy, green leaves and produce fragrant white flowers in the spring The fruit ripens in the winter, with most mandarin oranges being harvested from December to February The fruit is typically small, averaging about 5-8 cm in diameter, and has a bright orange color The skin is thin and easy to peel, while the flesh is juicy and sweet Studies on mandarin oranges such as one of Rincón et al (2005) showed that the fruit is a rich source of vitamin C, fiber, and antioxidants They are also low in calories, making them a healthy snack option In addition to being consumed fresh, mandarin oranges are also used in a variety of recipes, including salads, desserts, and beverages

Figure 2.1 “Cam sành” – Mandarin Orange in Vietnam (Credit: An Phat)

In terms of growing conditions, mandarin oranges require a warm and humid climate with well-draining soil They are tolerant of a wide range of soil types, but they prefer slightly acidic soil with a pH of around 6.5 Mandarin orange trees are sensitive to frost, and temperatures below -2°C can cause significant damage to the trees and fruit In Vietnam, mandarin oranges are typically grown in the northern areas with Vinh Hao commune in Ha Giang province being one of the major producing sites

2.4.2 Production of Mandarin Orange in Vietnam

Mandarin oranges are one of the most popular citrus fruits consumed in Vietnam The country has a suitable climate for mandarin orange production, and the fruit is grown in various regions across the country, including the north, central, and southern regions Mandarin orange production in Vietnam has experienced farmers According to the General Statistics Office of Vietnam, the production of mandarin oranges in the country reached approximately 887,000 tons in 2020, an increase of 1.6% compared to the previous year The majority of mandarin oranges are grown in the northern region of Vietnam, which accounts for approximately 70% of the total production The consumption of mandarin oranges in Vietnam is also high According to the same source, the per capita consumption of oranges in Vietnam was estimated to be 10.6 kg in 2020 This is significantly higher than the global average of 5 kg per capita, indicating the fruit's popularity among Vietnamese consumers This is a high number because of the fruit's popularity among consumers Mandarin oranges are known for their sweet, juicy flavor and are often consumed as a snack or used in various Vietnamese dishes The fruit is also used in traditional medicine for its health benefits, which has contributed to its popularity among consumers (Nguyen et al., 2020)

Figure 2.2 Orange production in Vietnam (Credit: Statista)

The production and consumption of mandarin oranges have significant economic implications for Vietnam The crop provides employment opportunities for many farmers, and the sale of mandarin oranges generates income for rural communities According to the Ministry of Agriculture and Rural Development, the value of fruit exports from Vietnam, including mandarin oranges, was approximately US$3.26 billion in 2020, an increase of 15.2% compared to the previous year The growth of the mandarin orange industry has also led to the development of infrastructure in rural areas According to a report by the Food and Agriculture Organization, the production of mandarin oranges has contributed to the development of irrigation systems and the improvement of rural roads, which have improved the living standards of many rural communities in Vietnam The demand for mandarin oranges in Vietnam is expected to continue to grow in the coming years due to population growth and rising income levels This presents an opportunity for farmers to increase their production and generate more income However, the production of mandarin oranges also presents some challenges, including disease and pest management, which can impact the quality and quantity of the fruit produced

According to the statistics from the General Department of Vietnam Customs, the export of Mandarin Orange in Vietnam has been showing a positive trend in recent years In 2020, the total volume of exported oranges reached approximately 37,000 metric tons, generating a total revenue of around USD 20 million This figure represents an increase of 10% in terms of volume and 13.4% in terms of value compared to the previous year Vietnam's main export markets for mandarin oranges are currently China, Taiwan, and South Korea These three markets accounted for over 90% of Vietnam's total orange exports in 2020 Other markets for exports from Vietnam include Thailand, Malaysia, and the United States In particular, the demand for Vietnamese mandarin oranges in China has been growing significantly, with China being the largest importer of Vietnam, accounting for more than half of the country's total mandarin oranges exports (Yang, 2021, 2022)

To meet the demands of these markets, Vietnam has been investing in the development of mandarin orange cultivation, particularly in the provinces of Ha Giang, Tuyen Quang, Ben Tre, Tien Giang, and Vinh Long In addition, Vietnam has also implemented measures to ensure the quality of orange exports, such as improving the management of cultivation, harvest, and post-harvest processes, and enhancing the application of advanced technologies in the mandarin orange production chain That is why the export of this specialty in Vietnam has been steadily increasing, with China, Taiwan, and South Korea being the main export markets (Sakata & Takanashi, 2018) Vietnam has been investing in the development of orange cultivation and implementing measures to ensure the quality of mandarin orange exports to meet the demands of these markets

2.4.2.3 Production and consumption in Vinh Hao Commune, Ha Giang Province

Vinh Hao Commune has long been renowned as one of the communes that produce the most mandarin oranges The quality of mandarin oranges from Vinh Hao is also considered highly in many markets both domestic and international The orange in Vinh Hao is especially large in size yet the taste remains original and even slightly sweeter than usual oranges Reports from the People’s Committee in Vinh Hao Commune claim that in 2020, the total number of households that grow mandarin oranges was 215 The total area for growing oranges in the commune is approximately 280 hectares, which is the largest area cultivating the fruit in Bac Quang District The people’s committee of Vinh Hao Commune has always been aware of the importance of producing mandarin oranges That is why the committee has been endeavoring to encourage the preservation of this production form

Recently, the commune has been developing mandarin orange cultivation by applying high standards such as VietGAP In fact, the area has recorded 30 households certified with the standard, corresponding to a total area of high- quality mandarin orange of approximately 60 hectares The activities of promoting orange mandarin in the commune have also been bustling with many different festivals or competitions among the communes in Bac Ha District, which were certified for mandarin oranges Recently, Vinh Ha Commune has participated in a Contest for Mandarin Orange products in Bac Quang District (Hoi thi san pham cam sanh huyen Bac Quang) along with 8 other communes, according to the Bac Quang people's committee (2023) This proves that mandarin orange plays a significant role in not only production and consumption but to some extend of the spiritual life Furthermore, the governance of Vinh Hao Commune has certainly focused on the development of this specialty.

METHODS

Subject of interest

The subject that this study focused on was the status of Agribank credit services as well as the issues that impede bank credit accessibility of Mandarin Orange growers in Vinh Hao Communes – Ha Giang Province

+ Location: This study focused on the relationship between credit services of

Agribank and mandarin orange growers in the territory of Vinh Hao Communes – Ha Giang Province

+ Time: The status of credit service activities was in 2022 Primary data was collected in 2023 while secondary data was collected for the period 2019-2022.

Research contents

+ Content 01: Natural and socio-economic conditions of the research area and their relationships with Agribank credit services and credit accessibility

+ Content 02: The status of bank credit services and credit accessing in Vinh Hao Commune in 2022

+ Content 03: The advantage – disadvantages and strengths – weaknesses of bank credit services that affect Mandarin Orange growers’ credit accessibility

+ Content 04: Directions and solutions for exploiting the strengths and solutions for resolving weaknesses in the bank credit system for agricultural households, improving accessibility and enhancing Mandarin Orange production in Vinh Hao Commune – Ha Giang Province.

Methods

The secondary data for this study are going involve the natural and socio- economic conditions of the research area, the system of bank credit that are currently employed in the research area, particularly, and in Vietnam, generally

In addition, official documents, decisions, decrees enacted by the government or the governance of the research area that are related to the research topic are also employed

Information and data regarding the natural and socio-economic conditions of the research area are going to be gathered from Ha Giang Department of Natural Resources and Environment and the Department of Statistics After gathering, the data are going to be analyzed and evaluated

The operation of the bank credit systems is going to be gathered from the official documents of the banks, the research area’s governance, and the government of Vietnam

Additionally, relevant data or data for comparisons and analysis are going to be inherited from online reports, articles, magazines, and other studies or theses on credit accessibility in Vietnam and in the world

This study gathered primary data via field surveys with prepared questionnaires for the Mandarin Orange growers in Vinh Hao Commune and the officials that work at Agribank branches in the region For selecting the sample, the study used the Slovin method (Mè Văn Dũng, 2019)(Slovin & Sushka, 1984), which calculate the sample for a survey via the following equation:

In this equation, n represents the volume of selected samples, N is the population, e is the error, which was set at 0.05 as the statistical confidence range is often 95% In Vinh Hao Commune, preliminary research had zoned 110 households that cultivated Mandarin Orange in 2022 Therefore, based on the equation, the study selected 90 households for surveying The survey for Mandarin Orange growers aimed to assess the influence of 08 different factors, including the demand of households, interest, duration, granted amount, protocols of application, bank officials, collaterals, and bank policies The survey ballot was designed to measure the level of influence based on the ordinal scale, which was

For the subject of Agribank officials, the study selected randomly 15 individuals who are working on credit services at Agribank branches in Vinh Hao Commune

The Descriptive Analysis method has been employed to provide an overview of the current state of borrowing and the operational situation of Agribank in Vinh Hao Commune, as well as to describe the economic and social aspects of each household over time and space

This is a widely-applied method of data analysis that are used to provide a more profound insight toward the findings of any study In this study, comparisons are conducted on quantitative or qualitative data as well as calculations of indexes regarding socio-economics between different points of time or articles in other findings The comparisons are meant to determine the fluctuation and credibility of indexes and contents found in this study In this method, data were input in tables to observe and evaluate the difference as well as the fluctuation between one another The indexes regarding time, absolute values, relative values, and average values were considered in comparisons

This study is going to consult with experts in the field of economic efficiency and bank credit accessibility with the findings of this study including raw data, secondary data, and processed data in order to synchronize information at the professional level Furthermore, expert opinions are going to be helpful in proposing solutions for the issues that bank credit accessibility in the research area is facing, aligning with the past experience to optimize the solutions In addition, this technique is going to filled in the possible gaps that other techniques of data analysis fail to cover

The processed data were synthesized and exhibited via tables and graphs with the help of Microsoft Word 2016, Microsoft Excel 2016, and Origin 2019

3.3.4 System of indicator for credit accessibility assessment

To analyze the efficiency of the borrowed capital as well as the role of bank credit in relations to Mandarin Orange growers in Vinh Hao Commune and factors affecting bank credit accessibility, the study employed the following indicators:

+ Average age of the householder: This indicator reflexes the influence of householders on the decision of credit accessing while also evaluating the relations between age and some conventions that claim with age comes wisdom

To calculate this indicator, the study employed:

Average + Educational attainment of the householder: This indicator affects the ability to apply advanced science and technology into production, thus manipulating the productivity of Mandarin Orange Moreover, high educational attainment often helps people participate in bank credit protocols

+ Population and labor structure: This indicator involves in the ability to produce of each family as well as Mandarin Orange grower

+ Average land/household: This indicator reflexes the financial situation of each household as well as the capability of potential collaterals, which can be used for borrowing bank credit capital That is why a household with large land likely benefits more when accessing bank credit However, this indicator also has a proportional relationship with the demand for capital in order to fully exploit the land area It was calculated via the following equation:

Average land/household * Bank credit accessing and usage indicators

+ Source of Borrowed Capital: The origin of the borrowed amount reflects your connection with various funding sources Evaluating the source of borrowed capital helps determine the reliability and credibility of the borrower, impacting the ability to access credit from different sources

+ The number of loans: The number of loans can reflect the level of credit needed and the borrower's debt management ability

+ Loan Volume: The total loan amount can affect the repayment capacity and overall financial situation of the borrower

+ Loan Interest Rate: The interest rate affects the repayment capacity and the total cost of the loan Lower interest rates are usually easier to manage and repay

+ Loan Term: The repayment period can affect the borrower's financial capacity in the future A short term may create higher financial pressure compared to a longer term

+ Repayment Method: How the borrower repays (evenly, principal-first) affects how the borrower manage finances and maintain financial stability during the loan period

+ Collateral Assets: Collateral assets provide security for the lender in case the borrower cannot repay The effectiveness of collateral assets affects the lender's risk level

+ Capital Usage Situation: How the borrower use the borrowed money affects the investment profitability and repayment ability Prudent capital usage can reflect the borrower's financial management ability

+ Self-owned capital of production household = Total costs - Borrowed amount;

Borrowed capital ratio / investment capital ratio

+ Total revenue (TR): The total value calculated in money terms of the various products produced in the model, including the portion of value used for consumption (household consumption and consumption for reproduction) and products sold on the market

+ Production costs (TC): All material costs, including costs for raw materials, seeds, animal feed, veterinary medicines, fertilizers, outsourced labor, and other services (excluding the labor of household members that cannot be specifically allocated)

+ Mixed income (Pr): The value of physical products and services for production sectors generated in a year or production cycle Mixed profit is calculated using the formula: Pr = TR - TC

+ Mixed income / production costs = Pr/TC (This indicator shows how much mixed income a household receives for every unit of production cost spent on business operations).

RESULTS AND DISCUSSION

Characteristics of the research area

4.1.1 Natural conditions of Vinh Hao Commune – Ha Giang Province

Vinh Hao Commune is an administrative territory of Bac Quang District – the most populated district among the 11 units of territory in Ha Giang Province Vinh Hao is located in the Southern part of the province The coordinate of Vinh Hao Commune is at 22.27 o North and 104.86 o East Most of its territory is adjacent to Tuyen Quang Province and other sub-districts of Bac Quang District

In general, this location possesses certain advantages, including the opportunity to exchange commodities and cultures with Tuyen Quang Province This is further solidified by the fact that Vinh Hao Commune has an important traffic line on Highway 279 Moreover, it also inherits the natural advantages of Ha Giang Province, most remarkably the proximity to China – a tremendous consumption of agricultural products from Ha Giang In fact, Vinh Hao Commune is considered one of the best socio-economic regions in this entire province

The terrain of Vinh Hao in particular and Ha Giang in general poses difficulties for transportation and infrastructural construction That is because most of this region consists of mountains with an average height of 400 – 500 m However, there are regions with high mountains of 700 – 1500 m Therefore, the terrain in Vinh Hao is categorized into 03 primary forms: high mountains, low mountains, and valleys

The composition of land in Vinh Hao is relatively firm Nevertheless, it has excellent drainage The layer of soil is thick Especially, the humus in Vinh Hao is abundant Those conditions are extremely great for growing citrus plants, particularly Mandarin Orange

Vinh Hao Commune’s climate is based on the natural location of Ha Giang Province in the Northern Mountainous Region of Vietnam, which generally experiences a subtropical climate, characterized by distinct seasons according to the Kửpper classification However, there are slight differences due to the impact of heights The region has a rainy season from May to October, with the heaviest rainfall occurring in July and August During this period, the weather is humid and temperatures are warmer, ranging from 20 to 30°C The dry season spans from November to April, normally with cooler temperatures of 10 – 18 o C December and January are usually the coldest months, with temperatures dropping to around 10°C (50°F) or even lower, especially in the mountainous areas Every year, the rainfall of this area is often greater than 2000 mm, which means a high annual rainfall In fact, Vinh Hao Commune and Bac Quang District are some of the few places with the highest rainfall in the country

+ Land: This is the most valuable natural resource in Vinh Hao Commune The total area of this place is 4491.87 hectares, consisting of 4% fluvisols (humus), 2.4% gleysols, 0.3% ferrasols (red soil), and 90.8% acrisols This means there is a diversity in soil distribution and thus leads to many feasible types of agricultural plants The acrisols and ferrasols are suitable for both short-term and long-term plants, including Mandarin Orange The nutrition of these soils is excellent and they have good drainage However, recently, it was recorded that the soils are reducing in terms of quality due to long-time cultivation and lack of soil improvement techniques

+ Water: The water resource in Vinh Hao Commune is relatively rich when it is supplied by 03 big rivers, including Lo River, Bac River, and Sao River Small water channels and streams are dense Along with high annual rainfall, the surface water in Vinh Hao is resourceful and suitable for serving large-scale agriculture Nevertheless, it is difficult to harvest the surface water as the terrain is extremely complicated Furthermore, the high slope often results in fast drainage of rivers and streams In addition to the surface water, there are underground streams that many households harvest to serve daily usage

+ Forest: The vegetation in Vinh Hao is relatively plentiful with various breeds distributing evenly in the territory There are over 3,000 hectares of forests, which account for almost 70% of the total natural area of Vinh Hao Production forests account for 50%, which are used to harvest ingredients for the paper- making industry and woodcraft In addition, there are rare breeds of valuable trees like Po Mu and Ngoc Am trees

+ Mineral: The mineral resources in Vinh Hao Commune are not rich and tend to scatter thinly in the territory of this place Limestone is the most prominent minable resource is limestone, which serves as a material for constructional industries However, the volume is unknown There is also gold but the amount and exploitation activity are insignificant

+ Human resources: The people in Vinh Hao Commune are patriotic and have a history of loyal behaviors toward the country They were shown to be resilient and diligent, working hard for their livelihood Furthermore, the structure of ethnicity in Vinh Hao, which is diverse, leads to a rich culture in the area These are not only the qualities that contribute greatly to the development of national socio-economy but also the spirit worth spreading and the capability of following orientations enacted by the Vietnamese government

4.1.2 Socio-economic background of Vinh Hao Commune

The economy of Vinh Hao Commune is primarily based on agriculture when 90% of the natural area is for cultivation and stock breeding The agricultural economy has risen dramatically thanks to the implementation of organic standards such as VietGap In 2022, more than 500 hectares of orange and 700 hectares of tea, which are the 02 main subjects for cultivation in Vinh Hao, were certified with VietGap standards As a result, the value of these products has increased significantly The highest price of Mandarin Orange recorded was 40,000 VND/kg, whereas the average range of price is often 20,000 – 30,000

VND/kg Compared to the number in 2018, which was only 15,000 VND/kg, these increases are very positive for people’s livelihood The price of tea has also been elevated by 15% Agricultural production in Vinh Hao Commune has become more organized with more cooperative models implemented in the area People now do not only cultivate plants and nurture animals but also sell products resulting from those activities All the aforementioned bases were the reason why in 2022, the GDP of Vinh Hao Commune has increased to 41 million VND/individual/year

In addition to a large agriculture, industries, handicrafts, and tourism also have a share in Vinh Hao Commune’s economy New policies of industrialization have led to new projects in the area that solved the employment situation in the commune Handicraft produced many significant products with exotic features, which are favored in many markets and festivals Regarding tourism, Vinh Hao was considered potential for tourism exploitation and the authorities had approved several projects of ecological tourist sites Initially, tourism has attracted significant visitors and through that created new livelihoods for the locals

The society of Vinh Hao Commune consists of 5.240 individuals in terms of population The population density of this place is about 116 individuals/km 2 As a Northern mountainous region in Vietnam, Vinh Hao has many different ethnic groups, which leads to a diverse and plentiful culture The locals have practiced agriculture for a long time so they have many experiences in cultivation and stock breeding that can be extremely useful However, the structure of labor at Vinh Hao remains with significant unemployment Vulnerable groups of people such as women and ethnic minorities lack much expertise and many opportunities for jobs and production

The most remarkable achievement that Vinh Hao Commune attained during its social development is the completion of the new countryside program in 2022 In general, the infrastructure of the place had been improved People’s materialistic the authorities of Vinh Hao had investigated the traffic systems in the countryside and afterward implemented project “solidify the street”, constructing concrete roads These activities were consulted with civil communities, thus ensuring the fairness and transparency Furthermore, the locality had aimed to its people as the primary force in construction activities, which enhanced the awareness and responsibility of civilians In 2022, 7 kilometers of concrete roads were finished at many hamlets The new countryside program of Vinh Hao Commune even incited people’s spirit and creativity in production thanks much to the direction from the authority In 2022, there were only 30 poor households over a total of 1.294 households, reducing by 20% compared to 2020 It is believed that in the near future, Vinh Hao Commune will become a comprehensively developed society and contribute greatly to the national development

Status of providing Agribank credit for Orange Mandarin growers in Vinh

4.2.1 The activity of Agribank Vinh Hao in credit services in 2020 – 2022 4.2.1.1 Capital mobilization

Like any customer of credit services, the bank also needs to mobilize capital from various sources in order to be able to provide credit A resourceful bank

The capital mobilization comes from 02 sources: individuals and cooperatives, which is demonstrated in Table 4.1 below:

Table 4.1 The status of capital mobilization of Agribank Vinh Hao in 2020 and 2022

(Source: Report of Agribank Bac Quang District)

In 2020, the activity for capital mobilization in Vinh Hao Commune of Agribank had obtained 41.51 billion VND In that amount, 63.36%, corresponding to over

26 billion VND was from individuals who participated in savings programs The rest was mobilized from cooperatives Those numbers tend to skyrocketed after 2 years when the total capital mobilized in 2022 was 66.03 billion, approximately

25 billion higher Nevertheless, the proportion between capital from individuals and cooperatives changed significantly when the proportion of individual capital dropped to 57.81% and the capital from cooperatives increased by 5.55% compared to that of 2020

This increasing tendency occurred due much to the application of digitalization policies accelerated by Agribank since 2021 This created a better opportunity for accessing bank services when people no longer needed to move far to reach a branch but instead do it via a mobile phone application Nevertheless, it is still difficult for Vinh Hao Commune to fully integrated with these new policies as the locality remains with poor households and low infrastructure

4.2.1.2 Results on credit service provision

In general, Agribank has met the demand of Mandarin Orange growers and other customers who access bank credit via the mobilized capital, thus helping many economic entities in production enhancement The results of credit provision of Agribank in Vinh Hao Commune is showed specifically in Table 4.2 below:

Table 4.2 Results on credit service provision of Agribank in Vinh Hao

(Source: Report of Agribank Bac Quang District)

The credit services of Agribank in Vinh Hao Commune tend to increase in terms of efficiency as time goes by In 2020, the total amount of loans given was 54.00 billion VND and then went up to 73.59 billion in 2022, which is a sharp increase

As the given loans is strictly related to the mobilized capital, this tendency is understandable when Table 4.1 showed how much higher the bank was capable of mobilizing in 2022

Despite also increasing, the amount of collected debt and outstanding balance did not behold such a dramatic rise From 42.60 billion in 2020, Agribank Vinh Hao only collected a number higher than 13 billion in 2022 The increase of outstanding balance from 2020 to 2022 thus was only by 11.90 billion

4.2.1.3 Outstanding balance based on occupation

The outstanding balance recorded in 2020 and 2022 at Agribank Bac Quang –

Table 4.3 Outstanding balance based on main credit uses of Agribank in Vinh Hao 2020 and 2022

(Source: Report of Agribank Bac Quang District)

In general, the total outstanding balance based on occupation of Agribank Vinh Hao increased significantly from 45.61 billion VND to 64.04 billion after 02 years from 2020 This leads to the balance for all the fields also rose in that period Nevertheless, the proportion corresponding to each field’s outstanding balance changed clearly Mandarin Orange cultivation from the 03 rd highest in the list rose to the 01 st as the proportion went from 18.33% in 2020 to 22.21% in

2022 Service accounted for a great proportion but decreased in 2020 (from 24.03% down to 20.26%) Tea production had an increased outstanding balance in 2022 but reduced proportion Other fields did not witness significant changes in the proportion

High investment in Mandarin Orange and Tea is comprehensible as since 2020, Vinh Hao Commune has promoted organic farming by applying VietGap – a set of standards for high-quality agricultural products This also leads to a better price and the market, thus solidifying the role of bank credit in Vinh Hao Commune

The results on the business of Agribank Vinh Hao in 2020 and 2022 are showed in Table 4.4 below:

Table 4.4 Results on the entire business of Agribank Vinh Hao in

(Source: Report of Agribank Bac Quang District)

In general, the income of Agribank Vinh Hao increased slightly from 28.13 billion VND to 29.50 billion in the period 2020 – 2022 Most of it came from credit contracts when this category often accounted for over 60% Unlike the income, the expenses decreased over the years Although bank saving interests increased (10.93 billion to 11.38 billion), the salary paid for personnel and other expenses had a reduced cost in 2022 compared to 2020 This is perhaps a good management of expenses when the difference between income and expenses increased in the period 2020 – 2022 However, the tendency of lowered salary an other expense is unlike many other places, such as Agribank Pho Yen – Thai Nguyen

4.2.2 Status of bank credit accessibility of Mandarin Orange growers and people’s assessment

4.2.2.1 Demand for credit capital of Mandarin Orange growers

The result of investigating Mandarin Orange growers’ demand for Agribank credit capital in Vinh Hao Commune is showed in Table 4.5 below:

Table 4.5 Demand for bank credit capital of Mandarin Orange growers

Number of Mandarin Orange households 90 100

Number of households with credit demands 54 60

Number of households refusing credit capital 36 40

36 households, corresponding to 40% of the participants, did not want to use bank credit capital or apply for any loans Because they are worried about unclear bank capital sources, they are afraid of not being able to repay debt, households blamed the complication of application protocols or difficult officials and households claimed their fear of bankruptcy, loss of harvest, bad weather, etc This number is relatively high, especially amidst the scene of promoting organic production in Vinh Hao particularly and Ha Giang Province generally

4.2.2.2 Cause of bank credit refusal

From the result recorded in section 4.2.2.1, the study investigated 36 Mandarin Orange households that did not participate in Agribank credit services in Vinh Hao Commune and found out the causes, which are synthesized via Table 4.6 below:

Table 4.6 Causes of bank credit refusal of Mandarin Orange growers

Criterion Number of households Proportion (%)

It is obvious that among 36 households that refused bank credit capital, most of them are afraid of risks and debts Particularly, 21 households (58.33%) claimed they couldn’t participate in credit services because of their fear of debts 08 households, corresponding to 22.22%, were afraid of risks such as bankruptcy, loss of harvest, and bad weather The rest, including 07 households (19.45%), blamed the complicated application protocols and the unclear capital sources of the bank Production risks and debts are always present when accessing bank credit However, if they are the causes of refusal, it is definitely due to a lack of clarification between the risks and the benefits If mandarin orange growers in Vinh Hao Commune had been aware of their potential betterment from bank credit capital, their decision on applying for a loan would have been easier

From the result recorded in section 4.2.2.1, the study investigated 54 Mandarin Orange households that participated in Agribank credit services in Vinh Hao Commune and found out their requirements as well as the bank’s response to their demand, which are synthesized in Table 4.7 below:

Table 4.7 Household requirements and the level of demand satisfaction

Number of survey participants Household 54 100

Loans approved by the bank Household 49 90.74

Loans refused by the bank Household 05 09.26

Average demand for capital Million VND 4,100

Average amount granted Million VND 2,000

There were only 05 households with the demand for bank credit capital but refused by the bank This was because their financial plans were not convincing, thus deemed risky by Agribank Vinh Hao Nevertheless, 05 is quite a low number About the demand of Mandarin Orange growers, the average result synthesized from all the responses showed that each household required about 4.1 billion VND However, the bank could only approve with approximately a half of their demand This issue could be addressed by the difference between capital mobilized and increasing demands While Mandarin Orange was developing with new production standards, the increase of capital mobilized from individuals and cooperatives could not match and thus fail to fully satisfy people’s request

Evaluation of Agribank credit accessibility of Mandarin Orange growers

The activities of Agribank in Vinh Hao Commune as well as the effects of bank credit on Mandarin Orange production in this area have showed various strengths and weaknesses, which could either enhance or lower bank credit accessibility of Mandarin Orange growers in this place

+ Positive results of bank activities, especially regarding capital mobilization, lending capital, and total business are a great foundation for credit services of Agribank for the people in Vinh Hao Commune Furthermore, digitalization has showed their potent effects on enhancing bank credit quality and accessibility of Mandarin Orange grower This will definitely be stronger in the future

+ Tendency of socio-economic development, particularly agriculture in Vinh Hao Commune has been creating more opportunities for bank credit services High-standard agriculture (VietGap) has been applied to Mandarin Orange and Tea production, which resulted in a sharp increase in the outstanding balance for these two categories in the period 2020 – 2022

+ Mandarin Orange growers’ demand for bank credit in Vinh Hao Commune is high, which facilitates a healthier flow of capital while also providing better products in quality, quantity, price, and profit

+ Bank credit were showed to pose potent impacts on production, thus asserting the role and necessity of this capital form

+ The capability of collecting debts remains an issue as the increase rate of debt collected and balance was lower than the rate of the lent amount between 2020 and 2022 Either the ability of the officials was weak or the risk of bankruptcy or

+ People and Mandarin Orange growers in Vinh Hao Commune still concerns deeply about the risks of bankruptcy, harvest loss, or incapability of repaying debt Although these are present, the high proportion of concerned people showed a lack of knowledge and confidence in Vinh Hao Commune, which is much higher than other localities

+ The structure of occupational fields that demand bank credit capital is not diverse Moreover, industries have not been catching up with the national trend of industrialization – modernization This creates certain obstruction for bank credit quality enhancement and Mandarin Orange growers’ credit accessibility

+ The bank hasn’t been able to fully satisfy the demand for capital of Mandarin Orange growers in Vinh Hao Commune This weakness could impact the morale of people negatively and thus reduce bank credit accessibility

+ Factors like the rate of interest, the duration of the loan, the demand of borrowing, and the collaterals are still too influential to Mandarin Orange growers’ interest in bank credit.

Proposed directions and solutions for enhancing credit accessibility of

4.4.1 Proposals to Mandarin Orange growers

+ Enhancing awareness and improving people's understanding of bank credit:

Communication and the market play a crucial role in enhancing people's understanding, thereby improving their access to credit New information channels should be deployed, while highlighting the role to enhance access to bank credit People need to be open and proactive in receiving and seeking information, as well as getting familiar with digital platforms to easily access and understand more

+ Renewing production activities: Mandarin Orange growers in Vinh Hao

Commune should innovate on their own to enhance their production capacity The application of scientific and technological advancements or advanced cultivation methods should be implemented on a larger scale, with closer linkages (cooperative model) Additionally, emphasizing the spirit of thriftiness and diligence is important

+ Researching the establishment of production and business plans: One of the weaknesses of farmers is their inability to clearly express the economic potential and feasibility of the projects or activities for which they need to borrow funds Participating in training or researching production and business plans to enhance planning abilities for farmers will be highly meaningful in the process of accessing credit Furthermore, individuals can refine production activities through a well-structured plan, thereby generating more economic potential in practical production

+ Promoting flexible interest rate adaptation for borrowing: The prevailing market interest rate of most banks often makes people feel challenged in repayment, especially for individuals engaged in farming in mountainous regions Adopting flexible borrowing rates tailored to specific industries and individual profiles should be applied to optimize solutions to the mentioned issues Flexible borrowing practices will also create sustainable value, satisfying the requirements of all relevant parties adequately

+ Improving lending methods: The higher-level bank institution holds significant authority over lending procedures Currently, due to application protocals, individuals face difficulties in accessing credit Reducing the number of steps will not only make it easier for Mandarin Orange growers in Vinh Hao Commune to access credit but also mitigate the occurrence of borrowing from unregulated credit institutions

+ Implementing policies to expand operations: In recent years, the district

Agricultural and Rural Development Bank has opened additional branches and invested in digitalization to reach a larger population However, there are still groups in various areas that have not yet been able to access the bank's credit services in Vinh Hao Commune Expanding the scale not only increases the capital available to Mandarin Orange growers but also provides access opportunities to a wider range of customer groups

+ Enhancing the effectiveness of credit advisory measures: Currently, credit advisory services for Mandarin Orange growers in Vinh Hao Commune have not been given sufficient attention, leading to potential risks Therefore, improving the existing methods or introducing new advisory approaches will help customers better understand and grasp the operational mechanisms, as well as their rights and obligations when accessing credit

4.4.2 Proposals to the administrative authorities

+ Renew the strategy for agricultural and rural development while ensuring the economic restructuring in line with the national policies (industrialization - modernization), while also keeping up with the trends of integration and applying scientific and technological advancements in all sectors, including agriculture and credit field

+ Intervene in simplifying procedures and mechanisms for credit access by individuals In addition, establishing a credit guarantee mechanism specifically for agriculture and farmers to avoid the need for people to use land rights as collateral, thereby providing people with more peace of mind when borrowing and using funds

+ Enhance the credit access capability of farmers both in terms of breadth and depth by implementing micro-level strategies for individuals and issuing guidelines in accordance with the direction and policies of the nation at the macro level, such as government agencies and associations, in order to strengthen the development of the quality of credit reaching the hands of the people

+ Promote and encourage investment by calling for and providing medium and long-term loans to the network Agribank in Vinh Hao Commune to increase capital availability for farmers' access Additionally, the district government can create supportive policies to expand the lending network of this bank to enhance people's credit access capability.

CONCLUSION

Bank credit has always been an issue that requires much attention from both administration and scientific study This study had examined the activity of Agribank credit services as well as the bank credit accessibility of Mandarin Orange growers in Vinh Hao Commune using various methods of data collection, data analysis, and a set of quality indicators The results showed that Agribank Vinh Hao had been mobilizing capital well, especially with digitalization, as the total capital pool increased from 41.51 billion VND in 2020 to 66.03 billion in 2022 (primarily consisting of individual savings) In terms of credit services, short-term loans and debts accounted for most of the total lended loans, collected debts, and outstanding balance The total numbers increased over time but the debts and the outstanding balance did not accelerate as significant as the given loans Balance based on occupation showed that Mandarin Orange was being invested hugely in 2022 The total business of Agribank Vinh Hao was positive as the profit was 4.5 billion VND in 2020, which increased to 7 billion in

2022 Regarding Mandarin Orange growers’ credit accessibility, there were still 40% households refusing credit capital, mostly due to their concern of debt repayment and production risks Most of the 60% having participated in bank credit services were approved with loans However, the amount granted is much less than the amount desired (2 billion VND/household compared to 4.1 billion VND/household average) Despite that, Mandarin Orange production increased much in terms of the area, the yield, the revenue, and the profit compared to before having loans Survey on factors affecting credit accessibility in Vinh Hao showed a potent patern of Demand, Interest, Duration, and Collaterals In addition, this study had also evaluated the strengths – weaknesses and advantages – disadvantages found from bank services and Mandarin Orange growers’ experiences with credit capital Based on those evaluations, solutions for the households, the bank, and the administrator were proposed

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SURVEY BALLOT FOR MANDARIN ORANGE GROWERS on bank credit experience and assessment

1 Full name of the householder: ………

Primary school Secondary high school High school

10 Average income of the household/month:

11 Type of household (based on the classification of the locality)

12 Land area of the household

13 Assets serving Mandarin Orange production

II STATUS OF BORROWED CAPITAL

1 Do you have demands for capital from Agribank

2 If not, please state your reason?

3 If yes, have you filled any application for bank loans?

4 Were you approved for loans?

5 If yes, please provide the following information

6 For what purpose did you apply for a loan?

7 Did you have to use any asset as collaterals for the loan?

8 If yes, please state the type of collaterals required by the bank?

9 Please provide your assessment on the bank credit service

Too short Appropriate Too long

10 Which factor was most influential to your credit accessing process?

1 How did you invest your borrowed capital into Mandarin Orange production

Breed Fertilizer Pesticide/herbicide Labor

2 How was your productivity before and after obtaining the loan?

Total revenue (1,000 VND) Before obtaining the loan

3 Did the results satisfy you?

4 How exactly did the loan affect your household?

Criterion Little influence Much influence No change

5 Please provide your opinion regarding the level of influence of these following factors on your decision of accessing bank credit?

6 Please tell us your proposals on improving bank credit accessibility