Using the Vietnam Access to Resources Household Survey (VARHS) with a panel of
households present from 2008 to 2016, the study investigates the impact of social capital on
household vulnerability. The empirical results indicate that both commune shocks and household
shocks are associated with the higher likelihood of having state-run group memberships, except
for the case of the political party. Group membership is also strongly influenced by a number of
household characteristics. Most importantly, participation in local organizations could reduce both
households’ probability of being poor and the utility loss caused by covariate risks. In addition,
social capital shows its influence on some intermediate factors, which in turn contribute to the
lower vulnerability at the household level. While participation in the Women Union or the Farmer
Union reinforces the households’ ability to overcome negative shocks, the memberships of the
Communist Party and the Farmer Union are associated with a higher level of saving. Members of
the Communist Party are more likely to possess insurance, and members of the Women Union
and the Farmer Union have better access to general information. The findings imply that
poverty reduction policies in rural Vietnam should consider the role of social capital,
especially in the forms of group participation, as an e ffective informal coping strategy.