Evaluating the impact of the government loan program on farms in Vietnam: An application of fuzzy regression discontinuity design

Abstract

This study examines the role of a government loan program on the performance of agricultural, forestry, and fishery farms in Vietnam, utilizing a fuzzy regression discontinuity design. The results of the study indicate that: (i) the government loan program decreases the total revenue of participating farms and (ii) the heterogeneous impact of the loan program depends on the type of farm (e.g., nonlivestock farms tend to receive more positive effects from the loan program). Notably, the study reveals some mechanisms explaining why having government loans can reduce farm efficiency; specifically, farms that use more pesticides and do not engage in e‐commerce activities tend to suffer from the government loan program. The results of the study have important implications for future research, particularly in improving the effectiveness of government loan programs and promoting formal e‐commerce activities in the future.