Description

This webinar examines how consumer finance draws on family and social networks to reduce the uncertainty inherent to credit transactions in Vietnam, which cannot be calculated through credit scoring methods. While virtually non-existent a decade ago, consumer finance is thriving in Vietnam, a country where 60 per cent of the population is un(der)banked and lacks credit history. To transform uncertainty into calculable credit risk, decrease exposure to bad debt, maximize profit, and determine loan eligibility and pricing, Vietnamese lenders apply standardized traditional and AI-based credit scoring methods against a backdrop of credit automation, digitalization, and depersonalization. Despite recent progress in calculating credit risk, lenders still lack intimate knowledge about borrowers, a major disadvantage for boosting popular products such as unsecured cash loans. Lenders overcome this limitation by shifting uncertainty onto family, social and professional networks, especially by incorporating borrowers’ relatives, friends and employers into credit transactions as informal guarantors, spies, collectors, and co-debtors. This process becomes particularly apparent in collection practices targeting borrowers’ social relations that are not legally liable. This financialization of familial and social networks is facilitated by the encroachment of family finance in daily life. This webinar is based on unique empirical evidence, consisting of in-depth interviews with 40 low-income borrowers and ten representatives from banks and financial companies including debt collectors, conducted in Ho Chi Minh City in 2019 and Hanoi and Ho Chi Minh City in 2021.

More info about the webinar series here