Access to credit and labour productivity: a new insight from Vietnamese firms

AbstractThis study aims to examine the impact of access to credit on labour productivity of Vietnamese firms. We use panel data from the Small and Medium Sized Manufacturing Enterprises Survey in Vietnam between 2007 and 2015 to conduct an analysis of how access to credit affects firm-level productivity. By applying two-stage least-squares regression method, we find that access to credit is statistically associated with a set of characteristics of firms, owner, and business environment. We also find that credit access has a significantly positive impact on firm’s labour productivity. Accordingly, better credit access leads to an improvement in labour productivity. Policy implications are discussed.