Formality and Financing Patterns of Small and Medium-Sized Enterprises in Vietnam

This study aims to examine the association between formality and financing patterns of small and medium-sized enterprises (SMEs) in an emerging country, using data from the Vietnam SME Survey in the period 2007-2013. A two-stage econometric approach is adopted to address endogeneity that mainly aris...

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Bibliographic Details
Published inEmerging markets finance & trade Vol. 57; no. 10; pp. 2852 - 2869
Main Author Archer, Lan Thanh
Format Journal Article
LanguageEnglish
Published Abingdon Routledge 09.08.2021
Taylor & Francis Ltd
Subjects
financing sources
formalization
Small & medium sized enterprises-SME
SMEs
Vietnam
Vietnam
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Summary:This study aims to examine the association between formality and financing patterns of small and medium-sized enterprises (SMEs) in an emerging country, using data from the Vietnam SME Survey in the period 2007-2013. A two-stage econometric approach is adopted to address endogeneity that mainly arises from the causal relationship between formality and financing accessibility. Empirical results show that formality does matter for financing patterns of SMEs: formality significantly increases the use of informal debt, equity funding, and retained earnings--but decreases the access to formal credit though the coefficient remains insignificant. Policy implications are discussed.
ISSN:1540-496X
1558-0938
DOI:10.1080/1540496X.2019.1658576