Organizational Dynamics and Financial Sustainability: Evidence from Vietnam’s People’s Credit Funds

This study investigates the factors affecting the financial sustainability of People's Credit Funds in Vietnam, which are essential for promoting financial inclusion in rural areas. The research, grounded in organizational management and financial systems theories, uses a mixed-methods approach with a survey of 363 stakeholders across all 63 Vietnamese provinces, conducted from October 2024 to March 2025. Multivariate regression analysis reveals that Organizational Performance, Loan Portfolio Management, Management Quality, Customer Outreach, Organizational Transparency, and Financial Sustainability all have a significant impact on Financial Self-Sufficiency. However, the study found that Organizational Capacity and the Legal and Policy Environment were only marginally significant. Interestingly, many of the significant factors showed negative coefficients, suggesting operational trade-offs specific to the context of Vietnamese  People's Credit Funds. For example, stringent risk management or extensive customer outreach may increase costs, temporarily reducing financial self-sufficiency. These findings broaden existing theoretical frameworks by highlighting the complex trade-offs within cooperative credit institutions. The study provides practical recommendations for People's Credit Funds’ managers, urging them to balance risk-based lending with digital tools to streamline operations and reduce costs. Policymakers are also advised to implement tax incentives to support the digital transformation of People's Credit Funds, aligning with Sustainable Development Goals 1 and 8.