The aim of this study is to investigate the impact of delegated monitoring by the group leader and peer monitoring by group members on loan defaults in a group-based lending program in Vietnam. Data used in the study were collected from a questionnaire survey of 675 participants involved in group-based lending program in the Mekong River Delta, Vietnam. The group-based lending program employs a unique monitoring system that involves hiring the group leader to supervise the group and encouraging group members to monitor each other. The empirical findings derived from the Probit model indicated that delegated monitoring significantly reduces loan defaults, but there was no evidence supporting the effectiveness of peer monitoring within the group. Additionally, under the delegated monitoring scheme, group size plays an important role in decreasing loan defaults.