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

Lan Thanh Archer

Emerging Markets Finance and Trade, 2021, vol. 57, issue 10, 2852-2869

Abstract: 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.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:57:y:2021:i:10:p:2852-2869

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DOI: 10.1080/1540496X.2019.1658576

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