Financing constraints, credit rationing and financing obstacles: evidence from firm-level data in South-Eastern Europe

Hashi, Iraj; Toçi, Valentin

doi:10.15458/2335-4216.1241

Cited by 11 publications

(5 citation statements)

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“…This is mainly due to the access to international financial resources; thus they do not rely heavily on domestic bank loans in developing countries. These findings are in line with other authors' results using a similar methodology (Hashi and Toçi, 2010;Coskun and Nizaeva, 2018). From columns 2 to 6 are included one by one also the country-specific coefficient, where in the last model we have both firm-specific and country-specific determinants of the financial obstacles of the SMEs in the Western Balkan countries.…”

Section: Research Resultssupporting

confidence: 89%

“…The size of the firm has been negatively associated with the level of their financial constrain (Beck et al, 2004;Angelini & Generale, 2005;Hashi & Toçi, 2010;Black, 2012). Thus, large firms face fewer financial constraints having access to many alternative financial sources.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Regarding ownership, it is discussed that foreign-owned firms have easier access to external financing because foreign parental ties induce a natural inclination toward lending to foreign firms (Schiantarelli & Sembenelli, 2000;Hashi & Toçi, 2010;Barth et al, 2011;Coskun & Nizaeva, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

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Determinants of Financing Obstacles of SMEs in Western Balkans

Gashi

Fetai

2021

Management Dynamics in the Knowledge Economy

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The main aim of this paper is to investigate the determinants of the financing obstacles and the effect of financial obstacles on the Small and Medium Enterprises (SME) growth in the Western Balkan region. The study employs OLS and probit models and using data from the Business Environment and Enterprise Survey (BEEPS V), conducted by EBRD and World Bank in the period 2012 – 2016. The econometric models used to achieve the main aim of this paper include the OLS and probit regression. From the results of the OLS, the study concludes that revealing the financial obstacles is an important determinant of SMEs’ growth in the Western Balkan countries. Further, among the firm-specific determinants of the financial constraints of SMEs, the study concludes that large firms face fewer financing obstacles than small firms, while older firms are more financially constrained than new enterprises. In addition, in the context of the ownership, findings reveal that SMEs with high foreign ownership of the firms, report fewer financial constraints. Given the presented results, it is important to emphasize the vital role of SMEs as the main employer in the Western Balkans region, emphasizing the need for policymakers to address possible reforms in achieving better regulation, institutional development, and governance efficiency, accounting standards, business, and better credit environment.

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Section: Research Resultssupporting

confidence: 89%

Section: Literature Reviewmentioning

confidence: 99%

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Determinants of Financing Obstacles of SMEs in Western Balkans

Gashi

Fetai

2021

Management Dynamics in the Knowledge Economy

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“…Indeed, the mainstream of the credit rationing literature supports the hypothesis that smaller firms tend to be disadvantaged relative to the larger ones, in terms of access to capital (e.g., Carpenter & Rondi, 2000;Audretsch & Elston, 2002;Drakos & Kallandranis, 2005;Garcia-Teruel & Martinez-Solano, 2007;Psillaki & Daskalakis, 2009;Hashi & Toci, 2010;Drakos & Giannakopoulos, 2011;Farinha & Félix, 2015;Kallandranis et al, 2023 etc.). Thus, SMEs are more likely to have less access to external finance and to be more constrained in their operations, which is intensified when firms adopt innovation.…”

Section: Classifying the Empirical Literaturementioning

confidence: 98%

Innovative Activity and Access to Finance of SMEs: Views and Agenda

Vlassas¹,

Kallandranis²,

Anastasiou³

2023

TEL

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A rapidly growing body of research applies survey methods to examine the ability of SMEs to obtain external financing. These studies focus on firmspecific characteristics and demonstrate the impact of such ability on their own growth and overall economic growth, among other outcomes. However, the use of external financing is of crucial importance, especially whether SMEs can adopt innovation when they succeed in getting a loan. This paper reviews this literature that is not as extensive as the one focusing on typical investments with two purposes. First, we summarize recent work, providing a guide to its methodologies, datasets, and findings. Second, we consider applications of the literature in innovation, including insights for policymakers that seek to assess the potential economic effects of investments in innovation.

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“…Most SMEs rely heavily on loan and overdraft facilities from banks and supplier credit to finance their businesses early, resulting from an external equity deficit (Fatoki & Aregbeshola 2013). Most developing countries generally have limited access to debt finance (Hashi & Toçi 2010). Stiglitz and Weiss (1981) indicate that private-sector financial institutions fail to allocate loans among small businesses primarily because of substantial information asymmetry (Irwin & Scott 2010).…”

Section: The Credit Rationing Theorymentioning

confidence: 99%

The relationship between financial literacy and financial access among SMES in the Ekurhuleni municipality

Changwesha,

Mutezo

2023

Acta Commercii

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Motivation of the study: Understanding the relationship between financial literacy and financial access among small businesses is imperative as they are key players in economic development. Empirical literature outlining this relationship is sparse. Therefore, the study made an original empirical contribution to the financial literacy-financial access nexus in the metropolitan.Research design, approach and method: A quantitative descriptive research design was followed. The survey method was used to gather data, where structured questionnaires were distributed to the respondents. The study considered a targeted population of 5609 registered SMEs in Ekurhuleni with a sample size of 384 prospective participants. A total of 310 responses were obtained from the owners and managers of SMEs in the municipality. The Statistical Package for Social Sciences was used to compute all statitical analyses for the study. Descriptive statistics were used to establish the SMEs' financial literacy and financial access relationship. Data were analysed using factor analysis, regression analysis and correlation analysis.Main findings: Entrepreneurs in Ekurhuleni were found to have a limited understanding of basic financial concepts implying low levels of financial knowledge. Additionally, the study established that financial access was significantly challenging for most SMEs. The findings further revealed a positive relationship between financial literacy and financial access.Practical managerial/ implications: The knowledge from this article may assist entrepreneurs and financial institutions in bridging the financial literacy gap, thereby increasing the likelihood of accessing funding by SMEs. It may also assist in influencing the development and implementation of micro and macroeconomics policies to raise financial literacy levels and leniency from financing sources towards SMEs.

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Financing constraints, credit rationing and financing obstacles: evidence from firm-level data in South-Eastern Europe

Cited by 11 publications

References 0 publications

Determinants of Financing Obstacles of SMEs in Western Balkans

Determinants of Financing Obstacles of SMEs in Western Balkans

Innovative Activity and Access to Finance of SMEs: Views and Agenda

The relationship between financial literacy and financial access among SMES in the Ekurhuleni municipality

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