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Impacts of switching from business households to enterprises on the financial performance

Author

Listed:
  • Le Quang Hieu

    (Hong Duc University)

  • Vu Hong Van

    (University of Finance - Marketing)

  • Nguyen Khanh Doanh

    (International School, Thai Nguyen University)

Abstract

This study aims to elucidate whether switching from business households to enterprises brings higher financial performance than not switching. The study was carried out in Thanh Hoa province, Vietnam. Our sample includes 366 establishments that were originally business households. Of which, 184 business households switched to enterprises (switchers), and 182 remained as business households (non-switchers). Using propensity score matching, we discovered several exciting findings. First, switching to enterprises has a positive impact on the financial performance of the switchers. Second, applying different matching algorithms, we found that business households that switched to enterprises have higher financial performance than those which did not, with an average increase in ROA from 0.134 to 0.164. Finally, our research findings suggest that provincial leaders and the Vietnamese government should encourage business households to switch to enterprises. In particular, leaders should focus on training programs, loan support, and strengthening support services from the government.

Suggested Citation

  • Le Quang Hieu & Vu Hong Van & Nguyen Khanh Doanh, 2023. "Impacts of switching from business households to enterprises on the financial performance," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(3), pages 417-437, September.
    • Handle: RePEc:spr:portec:v:22:y:2023:i:3:d:10.1007_s10258-022-00219-w
    DOI: 10.1007/s10258-022-00219-w
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    References listed on IDEAS

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