Connectedness and SME Financing in Post-Communist Economies: Evidence from Uzbekistan

Political connectedness and formal finance in transition economies

“…For example, using primary survey data, a case study of SMEs in Uzbekistan found that those with government connections were less likely to express a need for external finance, but were more likely to apply for bank credit, and that the application success rate was around 20% higher for politically connected SMEs [5]. Other country-level case studies from Vietnam, Slovenia, and China also found that political connectedness affected the distribution of formal finance [6], [11], [12].…”

“…There is growing empirical evidence to suggest that political connections play an important role in gaining access to formal finance [5], [6], [11], [12]. The most popular proxies for measuring political connectedness in these empirical studies include the proportion of top managers' time spent with public officials, lobbying, frequency of offering bribes and gifts to public officials, holding government contracts, and whether or not top managers' friends and/or family members work at government institutions.…”

“…An emerging body of literature that draws on institutional economics highlights the role of interpersonal social and political factors in explaining the asymmetric distribution of formal finance across enterprises of varying size [5], [6], [7]. According to this view, entrepreneurial decisions concerning investment, production, and exchange will respond not only to market prices, but also to rules and regulations that can jointly shape incentivizing and hindering mechanisms such as permits, fiscal concessions, and preferential access to resources.…”

“…Previous work of the author contains a larger number of background references for the material presented here and has been used intensively in all major parts of this article [1], [5], [13].…”

Optimal Financing Decisions of Two Cash-Constrained Supply Chains with Complementary Products

“…For our government, there are a lot of works that can be done for them, for instance, to conduct the initial public offering (IPO) and stock exchange [26], to set up some government connections with SMEs [27,28], to increase more and more affordable local financing supply [29], to produce a demonstration effect whereby successful SMEs supported by donor-backed programs [29], to implement some financial aid programs that focus on SME scarce availability of collateral [30]. ‚ For SMEs, there are also several ways to solve their financing problems, for example, to increase enterprises' internal capital efficiency to improve credit constraints [31,32], to seek some venture capitals [33], to get guarantee loans [34][35][36][37][38][39][40][41][42], to obtain pledge loans [43][44][45], to apply collateral loans [40,[46][47][48][49][50].…”