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.
|Number of pages||15|
|Journal||JOURNAL OF DEVELOPMENT STUDIES|
|Early online date||28 Dec 2020|
|Publication status||Published - 2021|
- short-term borrowings
- small and medium enterprises (SMEs)
- credit-rationing period