The Role of Microfinance in Improving Household Income and Consumption in Rural Champasak Province, Lao PDR

Phetoudone Vonglakhone; Inpaeng SAYVAYA; Sovat KHAMPHOUVAN; Sengsulixay SYKHANTHONG

doi:10.36948/ijfmr.2025.v07i05.59206

The Role of Microfinance in Improving Household Income and Consumption in Rural Champasak Province, Lao PDR

Author(s)	Mr. Phetoudone Vonglakhone, Inpaeng SAYVAYA, Sovat KHAMPHOUVAN, Sengsulixay SYKHANTHONG
Country	Laos
Abstract	Laos is a poor country; 18.87% of families were still living in poverty, and the population lived with an income below US$3.65/day (World Bank, 2023). There are various reasons for this poverty rate. One reason is the lack of capital for production or income-generating activities because the villagers cannot access credit. Therefore, the government of Laos recognizes microfinance as a major tool for poverty reduction by providing capital to the poor and low-income households. The Nayoby bank is one of the government's financial institutions that provides credit to people for income-generating activities to achieve the goal of reducing the poverty rate to less than 10% in 2025 (MPI, 2020). There is a debate on the impact of microfinance, as some researchers confirmed that microfinance has positive impact on income, consumption and reduce poverty. The impact of microfinance on income, consumption and poverty are still in question, and also lack of examine the effect of Nayoby bank credit on households income and consumption in the Sam Sang Pilot Project Area of Government at Champasak Province, Lao PDR. This is an important to achieve the goal of reducing poverty of Laos. Therefore, the main objective of this study is to examine the impact of microfinance in term of the Nayoby bank credit on Households income and consumption. In order to respond to this objective, we conducted survey of 261 households in the Sam Sang Pilot Project Area of Government at Paksong district, Champasak province. The regression model is applied to examine the impact of microfinance on household income and consumption. We found that the Nayoby bank credit has a positive significant impact on household income from agriculture, consumption, and also increase food consumption. This study suggests that policy makers or private agencies to help people in rural areas, especially farmers for accessing to credit from the Nayoby bank and extend credit to those with low incomes or the poor to create jobs, generate income and achieve the poverty reduction goal in 2025.
Keywords	Microfinance, Nayoby Bank, and the Sam Sang Pilot Project
Field	Mathematics > Economy / Commerce
Published In	Volume 7, Issue 5, September-October 2025
Published On	2025-10-31
DOI	https://doi.org/10.36948/ijfmr.2025.v07i05.59206

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The Role of Microfinance in Improving Household Income and Consumption in Rural Champasak Province, Lao PDR

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