Informal Short-term Borrowings and Small and Medium Enterprises’ Performance in a Credit Crunch: Evidence from Vietnam

Thang Bach, Thanh Le, Yen Bui

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This study examines the access to informal short-term borrowings of small and medium enterprises (SMEs) and their performance in a credit-rationing period. Using a unique data set on Vietnamese private manufacturing SMEs spanning before, at the onset of, and during the period of credit distress 2011–2014, we find that bank loans act as a substitute for informal borrowings prior to but a complement during the crisis. Meanwhile, trade credit always complements informal borrowings, even when the crisis endures. Informal borrowings help enhance SMEs’ sales and investment performance and outweigh trade credit in predicting firms’ investments. Obtained findings convey important policy implications on the macro-management of informal short-term finance in the credit distress.
Original languageEnglish
Pages (from-to)1321-1335
Number of pages15
JournalJOURNAL OF DEVELOPMENT STUDIES
Volume57
Issue number8
Early online date28 Dec 2020
DOIs
Publication statusPublished - 2021
Externally publishedYes

Keywords

  • short-term borrowings
  • small and medium enterprises (SMEs)
  • credit-rationing period
  • Vietnam

Fingerprint

Dive into the research topics of 'Informal Short-term Borrowings and Small and Medium Enterprises’ Performance in a Credit Crunch: Evidence from Vietnam'. Together they form a unique fingerprint.

Cite this