Consumer Finance in Vietnam: The De/personalization of Credit and Debt Collection

In Minh T.N. Nguyen and Kirsten Endres (eds), Reconfiguring Vietnam: Global Encounters, Translocal Lifeworlds, Yale: Yale Southeast Asia Studies Monograph Series (with Khanh P. Trinh, Doai T.T. Bui. 2024)

Consumer finance is thriving in Vietnam. This market has proliferated over the past decade, driven by a favourable demographic and a steady increase in income and consumption among a young and aspirational population. Government and financial actors promote rapid credit liberalization to curb informal credit, especially ‘black credit’. This term refers to moneylending operations, high-interest rates and harsh recovery methods. Black credit stirs public anxiety and a call for political action. This moralization of finance is not unique to Vietnam. In other countries, too, policy-makers, developers and financiers conflate moneylending with an archaic subsistence economy to promote its replacement with an optimized market economy expected to alleviate financial exclusion and poverty. Development studies challenge this substitution theory by highlighting the complementarity and symbiosis of formal and informal financial markets. This article contributes to these debates by showing that consumer finance and moneylending compete for attracting unbanked borrowers by providing instant cash loans a fast and easy credit experience. Instead of eliminating moneylenders, it appears that the rapid growth of consumer finance boosts their professionalization, digitalization and visibility. Overall, consumer finance and moneylending develop in parallel and borrow each other’s techniques and practices. This mirroring obfuscates the foundation of financial transformation and means borrowers have to navigate a messy continuum of formal and informal practices. This article is based on in-depth interviews with 40 borrowers, ten moneylenders including two gangs, and twenty representatives from banks and financial companies, conducted in Ho Chi Minh City in 2019 and Hanoi in 2021.