Does innovation promote access to informal loans? Evidence from a transitional economy

Ly Kim Cuong and Hoang Tran Hau

Finance Research Letters, 2021, vol. 40, issue C

Abstract: This paper examines the way innovation can promote access to informal loans. Using a sample of Vietnamese small and medium-sized enterprises, our results reveal that more innovative firms are less likely to seek informal loans for their funding needs. This study also shows that innovative activities boost firm exports, and improve a firm's chances of securing government financial support, which in turn reduces their need for the informal credit market. Older firms and formal firms are found to be less likely to obtain informal loans. We suggest that government provides firms with more governmental support to stimulate the transparency of the credit market via financial institutions.

Keywords: Innovation; Small and medium-sized enterprise; Informal loan (search for similar items in EconPapers)
JEL-codes: E61 G32 H25 H26 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:40:y:2021:i:c:s1544612320301070

DOI: 10.1016/j.frl.2020.101718

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