Financing Constraints, Credit, Rationing, and Financing Obstacles: Evidence from Firm Level Data in South Eastern Europe

Hashi, Iraj; Toçi, Valentin

doi:10.1057/9780230302211_4

Cited by 20 publications

(20 citation statements)

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“…Hashi and Krasniqi (2011), employing ordinary least squares (OLS) regression and using data from the Business Environment and Enterprise Survey (BEEPS) in cases of three Central European (Poland, Hungary, Czech Republic) and three SEE countries (Albania, Macedonia, Serbia, and Montenegro), argued that differences in access to external financing between country groups were related to the growth stages of SMEs and levels of institutional development. Hashi and Toçi (2010), applying the tobit and logit models to BEEPS data, examined firm-specific determinants of SMEs' financing constraints in SEE. The authors concluded that compared with large firms, SMEs are more financially constrained, relying mostly on internal financial sources because their loan applications are more likely to be refused.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In keeping with the literature (Barth et al, 2011;Hashi & Toçi, 2010), financial constraint was measured based on the responses of firms' managers to the question, "Is access to finance, which includes its availability and cost, interest rates, fees, and collateral requirements, an obstacle to the operation of this establishment," which ranged from 0 (no obstacle) to 4 (very severe obstacle).…”

Section: Data and Descriptive Statisticsmentioning

confidence: 99%

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Investigating the Relationship Between Financial Constraint and Growth of SMEs in South Eastern Europe

Nizaeva

Çoşkun

2019

SAGE Open

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This study investigates the determinants of financial constraint and its impact on the growth of small and medium-sized enterprises (SME) in South Eastern Europe (SEE). In this study, enterprise data from the fifth round of the Business Environment and Enterprise Survey (BEEPS V) undertaken in 2012-2016 were used, and an empirical analysis including ordered probit, probit, and feasible generalized least squares (FGLS) specifications was conducted. The findings evidence that financial constraint is significantly detrimental to SME growth in the region. Moreover, SMEs operating in trade sector perceive access to finance comparatively less, whereas mature enterprises perceive it as more constraining. Among country-specific factors, high banking sector concentration adversely affects access to finance, whereas more domestic credit provided to private sector mitigates the financial constraint perception of SMEs.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Data and Descriptive Statisticsmentioning

confidence: 99%

Investigating the Relationship Between Financial Constraint and Growth of SMEs in South Eastern Europe

Nizaeva

Çoşkun

2019

SAGE Open

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“…Toci & Hashi, 2010;Stephanou & Rodriguez, 2008;Mambula, 2002;Okpara & Wynn, 2007) in finding that high interest rates are statistically significant to SMEs' financing obstacles. Because of measurement variance, the results of this study are inconsistent with previous studies (Gray et al, 1997;Kiggundu, 2002;Trulsson, 1997;vanDijk, 1995;Toci & Hashi, 2010;Stephanou & Rodriguez; which indicate that most SMEs cannot meet the requirements for commercial loans because they lack sufficient collateral. The finding that favourable interest rates explain significant variances in access to formal credit indicates that lending institutions in Uganda offer loans at unfavourable interest rates.…”

Section: [Insert Table III About Here]mentioning

confidence: 99%

Lending terms, financial literacy and formal credit accessibility

Nkundabanyanga

Kasozi

Nalukenge

et al. 2014

International Journal of Social Economics

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Purpose -To investigate the relationship between commercial bank lending terms, financial literacy and access to formal credit by SMEs Design/methodology/approach -In this cross-sectional study, we surveyed 384 business owners or managers of SMEs in Uganda. We applied confirmatory factor analysis to reduce the number of factors and identify the important elements that capture commercial lending terms, financial literacy and access to formal credit. We put forward and tested two hypotheses relating to the significance of the relationship between perceived commercial bank lending terms, financial literacy and access to formal credit using Structural Equation Modeling (SEM) with Analysis of Moment Structures (AMOS) 18.Findings -The results suggest a positive and significant relationship between perceived commercial bank lending terms, financial literacy and access to formal credit. Moreover, the ANOVA results serendipitously show that access to formal credit varies with type of business and turnover. However, collateral and loan repayment periods are not observed variables for commercial bank lending terms. The most significant observed variable for commercial bank lending terms is interest rates. This, together with financial literacy, explains 31 percent of the variances in access to formal credit by SMEs in Uganda.Originality/value -The results provide initial evidence of the aggregate explanatory power of interest rates and financial literacy for the criterion variable, access to formal credit by SMEs.Result limitations/implications -Our study is limited to the SME firms registered and operating in Kampala, Uganda and it is possible that our results are only applicable to these firms in Uganda. Nevertheless, our findings have implications to commercial banks wishing to improve the turnover of their micro-lending schemes. The findings also have implications for governments aiming at improving access to finance to overcome income inequality problems, and also improve their growth prospects.Practical implications -Efforts by the stakeholders to improve financial literacy of SMEs owners and managers must be matched with favourable interest rates if access to formal credit is to be enhanced.

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“…The evidence shows that better access to external finance is likely to be one of the most effective routes to promoting firm growth (Pissarides 1999;Filatotchev and Mickiewicz 2006;Hashi and Toci 2010;Wehinger 2014).…”

Section: Business Environment Literature Reviewmentioning

confidence: 99%

An application of growth diagnostics on the growth of firms: with evidence from Kosovo firms

Sahiti

Smith

2017

J Innov Entrep

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This paper provides evidence on the impact of the business environment on the growth of firms in less-developed countries, with evidence from Kosovo firms. The theoretical perspective used is growth diagnostics. The data used to test the hypotheses were obtained from two different sources: international surveys and a manager survey dataset. The findings show that the business environment in Kosovo provides little incentive for firm growth. Further, empirical evidence shows that the business environment in Kosovo is characterised by low appropriability, with a high cost of capital, and in which complementary factors in the form of human capital are scarce.

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Financing Constraints, Credit, Rationing, and Financing Obstacles: Evidence from Firm Level Data in South Eastern Europe

Cited by 20 publications

References 40 publications

Investigating the Relationship Between Financial Constraint and Growth of SMEs in South Eastern Europe

Investigating the Relationship Between Financial Constraint and Growth of SMEs in South Eastern Europe

Lending terms, financial literacy and formal credit accessibility

An application of growth diagnostics on the growth of firms: with evidence from Kosovo firms

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