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What Factors Determine Whether Small and Medium Enterprises Obtain Credit from the Formal Credit Market? The Case of Vietnam

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  • Nguyet Thi Khanh Cao

Abstract

Using a survey of Vietnamese small and medium enterprises (SMEs) conducted during 2005–2013, this paper examines the process of applying for a formal loan and the level of satisfaction (credit needs) obtained by SMEs. The empirical results show that banking relationships and the business environment are important factors when applying for and obtaining formal credit. However, positive measures of firms' financial performance, such as a high return on assets score and sales growth, did not have a significant influence on whether firms obtained credit. Formal financial institutions in Vietnam were found to depend too much on collateral assets in assessing whether to supply credit to an SME.

Suggested Citation

  • Nguyet Thi Khanh Cao, 2019. "What Factors Determine Whether Small and Medium Enterprises Obtain Credit from the Formal Credit Market? The Case of Vietnam," Asian Economic Journal, East Asian Economic Association, vol. 33(2), pages 191-213, June.
    • Handle: RePEc:bla:asiaec:v:33:y:2019:i:2:p:191-213
    DOI: 10.1111/asej.12183
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    Cited by:

    1. Rozina Akther, 2022. "Factors associated with small and medium enterprise financing: a study from Bangladesh," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 12(1), pages 265-277, December.
    2. Manh-Tung Ho & Ngoc-Thang B. Le & Hung-Long D. Tran & Quoc-Hung Nguyen & Manh-Ha Pham & Minh-Hoang Ly & Manh-Toan Ho & Minh-Hoang Nguyen & Quan-Hoang Vuong, 2021. "A Systematic and Critical Review on the Research Landscape of Finance in Vietnam from 2008 to 2020," JRFM, MDPI, vol. 14(5), pages 1-24, May.
    3. Thi Thu Tra Pham & Thai Vu Hong Nguyen & Son Kien Nguyen & Hieu Thi Hoang Nguyen, 2023. "Does planned innovation promote financial access? Evidence from Vietnamese SMEs," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(2), pages 281-307, June.

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