Determinants of Financing Pattern and Access to Formal -Informal Credit: The Case of Small and Medium Sized Enterprises in Viet Nam

Nguyen, Nhung; Luu, Nhung

doi:10.5296/jmr.v5i2.3266

Cited by 65 publications

(88 citation statements)

References 28 publications

(16 reference statements)

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“…Considering most scholars' perspectives on factors influencing SMME borrowing (Berger & Udell 2006;Chandler 2009;Fatoki 2013;Fatoki & Asah 2011;Haron et al 2013;Makhbul 2011;Mutoko & Kapunda 2015;Myers 1984;Nguyen & Luu 2013;Sidik 2012;Zarook, Rahman & Khanam, 2013), the summary of main characteristics that influence borrowing include firm income (net profit or annual turnover) and owner's marital status, gender, highest education qualification and number of years in position.…”

Section: Empirical Literature On the Factors Influencing Small Mediumentioning

confidence: 99%

Factors influencing small, medium and micro-sized enterprises’ borrowing from banks: The case of the Botswana manufacturing sector

Mutoko

Kapunda

2017

Acta Commercii

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The objective of the study: The main objective of this study is to determine the factors that influence manufacturing small, medium and micro-sized enterprises’ (SMMEs) borrowing from banks.Problem statement: This article examines factors that affect SMMEs’ ability to borrow money from commercial banks. Empirical evidence was collected from manufacturing SMMEs.Motivation for the study: There is a scarcity of studies on factors influencing borrowing among Botswana manufacturing SMMEs.Methodology: The study employed both qualitative and quantitative research designs. The random stratified sampling technique was used to draw a sample of 100 manufacturing SMMEs from a population of 329 registered manufacturing SMMEs in Botswana. Descriptive and inferential statistics were used to analyse the data. Furthermore, multivariate logistic regression estimation was used to obtain the main objective.Main findings: The empirical results showed that longevity in position and annual turnover have positive impact on getting access to bank loans, while marital status has a negative effect on access to bank loans.Practical implications: An understanding of factors influencing borrowing can increase chances of an SMME gaining financing from commercial banks, thus solving the challenge of access to finance.Contributions: The results are significant to SMMEs, policymakers, the banking sector and other researchers. Furthermore, this study increases literature on SMME challenges and financing logistics.

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Section: Empirical Literature On the Factors Influencing Small Mediumentioning

confidence: 99%

Factors influencing small, medium and micro-sized enterprises’ borrowing from banks: The case of the Botswana manufacturing sector

Mutoko

Kapunda

2017

Acta Commercii

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“…In addition, several research on access to informal credit in Vietnam such as Tarp. F. (2008), Rand (2009), Nguyen and Luu (2013) for instance, did not exclude it out of the sample as we expected too. Hence, in this paper, we exclude firms that consider family as the most important informal credit source in order to explore new determinants of access to informal credit for Vietnamese SMEs.…”

Section: Literature Reviewmentioning

confidence: 89%

“…With regards to the determinants of access to informal credit, factors such as formal credit constraints, age and size of firms, firm performance, location, owner characteristics have been discussed (Safavian and Wimpey, 2007;Rand, 2009;Yaldiz et al 2010;Nguyen and Luu, 2013;Madestam, 2014;Yener, 2014). In an effort to investigate the impact of a firm's usual environment on firms' access to informal credit market, Safavian and Wimpey (2007) analyzed the link between corruption, regulation and financial markets.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Especially in Vietnam, where the banking system is still immature, informal credit allows fast growing enterprises to seize market opportunities (Rand, 2007). With regards to the determinants of access to informal credit, major influential factors such as formal credit constraints, age and size of firms, firm performance, location and owner characteristics have been clearly examined in the current literature (Safavian and Wimpey, 2007;Elmas Yaldiz et al, 2010;Nguyen and Luu, 2013). In an effort to investigate the impacts of a firm's usual environment on firms' access to informal credit market, Safavian and Wimpey (2007) analyzed the link between corruption, regulations and financial markets.…”

Section: Introductionmentioning

confidence: 99%

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Why do Small and Medium Enterprises Need to Access Informal Credit? The Case of Vietnam

Nguyet

2014

IFB

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For Vietnamese SMEs, the informal credit channel is still the most familiar financing source despite government's efforts to widen access to formal credit. The present paper attempts to seek out new evidence to determine why SMEs' access the informal credit market after excluding firms that consider family as the most important informal source out of sample. The empirical results strongly support three following hypotheses: (1) Firms that cannot be satisfied through formal credit market choose to access informal credit; (2) Firms access informal credit, in part, to reduce application cost and to provide immediate access to credit to seize investment chances; (3) Good business environment enables SMEs to decrease their reliance on informal credit. Moreover, we found that small firms, and firms located in rural areas were more likely to use informal credit than others. Furthermore, a higher age of owner and a good business performance both help firms decrease their reliance on informal credit.

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“…Age: The age of the applicant is another commonly studied factor in the field [29] no evidence of age bias has been provided. However, Nguyen and Luu [27] and Abdulsaleh and Worthington [30], among others, found that age does have an effect on the capability to succeed in loan issuance. Race: Racial discrimination in the field of credit allocation has been analyzed several times in recent years.…”

Section: Literature Reviewmentioning

confidence: 99%

Is the Lending Decision-Making Process Affected by Behavioral Biases? <br/>—Evidence from Southern Italy

D’Angelo¹,

Mustilli²,

Piccolo³

2018

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The objective of this article was to verify whether, in the decision-making process concerning bank loans issuance, managers have been influenced or not by how they perceive some personal characteristics of the applicant, even if these characteristics have nothing to do with the financial aspects typically analyzed to determine creditworthiness. In particular, we analyzed the impact of gender, age, beauty, race and education of the borrower on the probability to be funded. The study was conducted submitting face-to-face questionnaires to 212 officers working in the credit chain of 25 banks and data have been analyzed using the logistic regression model. The chosen setting was the south of Italy and in particular of the Campania region. The results show that there has been some influence of bias regarding gender, age and beauty, while no significant relationship has been found with reference to the racial discrimination or to the cultural level of the applicant. These results, which confirm the evidence already found in other settings by previous empirical analyses, would lead to highlight that there is an adverse selection mechanism in the provision of banks' credit capital.

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Determinants of Financing Pattern and Access to Formal -Informal Credit: The Case of Small and Medium Sized Enterprises in Viet Nam

Cited by 65 publications

References 28 publications

Factors influencing small, medium and micro-sized enterprises’ borrowing from banks: The case of the Botswana manufacturing sector

Factors influencing small, medium and micro-sized enterprises’ borrowing from banks: The case of the Botswana manufacturing sector

Why do Small and Medium Enterprises Need to Access Informal Credit? The Case of Vietnam

Is the Lending Decision-Making Process Affected by Behavioral Biases? <br/>—Evidence from Southern Italy

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Determinants of Financing Pattern and Access to Formal -Informal Credit: The Case of Small and Medium Sized Enterprises in Viet Nam

Cited by 65 publications

References 28 publications

Factors influencing small, medium and micro-sized enterprises’ borrowing from banks: The case of the Botswana manufacturing sector

Factors influencing small, medium and micro-sized enterprises’ borrowing from banks: The case of the Botswana manufacturing sector

Why do Small and Medium Enterprises Need to Access Informal Credit? The Case of Vietnam

Is the Lending Decision-Making Process Affected by Behavioral Biases? &lt;br/&gt;—Evidence from Southern Italy

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Is the Lending Decision-Making Process Affected by Behavioral Biases? <br/>—Evidence from Southern Italy