Microfinance Accessibility and Rural Poverty Dynamics: Evidence from Remote Village Communities in Vietnam

Abstract

This study investigates the complex relationship between microfinance accessibility and poverty alleviation dynamics within remote village communities in Vietnam, employing a comprehensive analytical framework that integrates structural equation modelling (SEM) with fuzzy-set qualitative comparative analysis (fsQCA). The research examines how microfinance accessibility influences household economic outcomes through multiple theoretical lenses, including financial inclusion theory, capability approach, and institutional theory. Utilising primary data collected from 485 households across 28 remote villages in northern Vietnam, this study employs partial least squares structural equation modelling (PLS-SEM) to examine direct and indirect relationships between microfinance accessibility, financial capability, social capital, and poverty reduction outcomes. The findings reveal that microfinance accessibility significantly enhances household economic welfare through improved financial capability and strengthened social networks, with the relationship being moderated by geographic remoteness and institutional quality. The fsQCA analysis identifies three distinct configurational pathways through which microfinance accessibility contributes to poverty alleviation, highlighting the importance of contextual factors in determining effectiveness. The study contributes to the microfinance literature by providing empirical evidence of the multifaceted nature of microfinance impact and offers practical insights for policymakers and practitioners seeking to optimise microfinance programme design in remote rural contexts.