Local institutions, external finance and investment decisions of small businesses in Vietnam

2021 ◽  
pp. 100880
Author(s):  
Bach Nguyen
Keyword(s):  
Small Businesses ◽  
Investment Decisions ◽  
Local Institutions ◽  
External Finance

scholarly journals The relative importance of regional institutions and external finance for small business investment: evidence from Vietnam

2020 ◽  
Vol 16 (6) ◽  
pp. 911-929
Author(s):  
Bach Nguyen
Keyword(s):  
Small Business ◽  
Small Businesses ◽  
Relative Importance ◽  
Local Institutions ◽  
Firm Investment ◽  
Business Investment ◽  
External Finance ◽  
Institutional Settings ◽  
Heterogeneous Effects ◽  
Conventional Models

AbstractThis study examines the relative importance of local institutions and external finance on small business investment. Utilising the institutional theory, we argue that local institutions and external finance have heterogeneous effects on firm investment. More importantly, they may interact and moderate each other. Analysing a set of 1.3 million observations of small businesses operating in Vietnam (2006–2016) obtained from the Annual Enterprise Survey data from the Vietnam Statistics Office, we find that local institutional settings and external finance are important determinants of firm investment. Moreover, local institutions are able to moderate the effects of external finance on firm investment. As such, this study asserts that conventional models cannot discern whether institutions or external finance are more important to firm investment. Rather, the relative importance of institutions and external finance should be investigated from the perspective of their interaction.

scholarly journals Networking in Weak Institutions: When Is It Good for Small Business Investment? The Case of Vietnam

2021 ◽  
pp. 1-38
Author(s):  
Bach Nguyen
Keyword(s):  
Small Businesses ◽  
Social Ties ◽  
Investment Decisions ◽  
Local Institutions ◽  
Institutional Voids ◽  
Governance System ◽  
Government Officials ◽  
Weak Institutions ◽  
Legal Enforcement ◽  
Firm Investments

ABSTRACT This study investigates the influence of business-specific, bank-specific, and political-specific networks on small firm investments in Vietnam. Also, I aim to explain how these social networks substitute the weaknesses of local institutions. Examining a set of more than 9,800 firm-year observations of small businesses in Vietnam from 2005–2015, I find that social ties with bank officials can boost firm investments; social ties with government officials can help firms overcome institutional voids; whereas social ties with businesspeople appear trivial to investment decisions. More importantly, I propose that networking, especially networks built upon connections with government officials, can substitute local institutions by addressing weaknesses in (1) inefficient legal enforcement, (2) corruption, (3) bureaucratic compliance, and (4) non-transparent governance system.

The Qualitative Relationship Between Banks and SMEs in Wales

2017 ◽  
pp. 86-110
Author(s):  
Atsede Woldie ◽  
Hooman Hagshenas ◽  
Brychan Celfyn Thomas
Keyword(s):  
Asymmetric Information ◽  
Small Businesses ◽  
Order Theory ◽  
The Other ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
External Finance ◽  
Other Hand ◽  
Qualitative Relationship

A long-term or close and intense relationship with banks could help overcome the main problems like asymmetric information. Using collateral is another way to overcome the effects of asymmetric information. The findings show that having collateral does not reduce loan costs, and on the other hand it will increase the availability of finance for small businesses. In general, small businesses use pecking order theory in choosing their formal sources of finance. Because of their lack of knowledge, they are not completely aware of available sources of finance. Banks are the first and most important external finance provider for small businesses, so having a good long-term relationship with banks can help them to overcome problems like asymmetric information, which would influence their access to more finance. Collateral is the other way to access more finance and it can help small businesses in their relationship with banks, especially in a period of unsustainability to reduce the risks for banks.

Money for nothing? Risks in biopharmaceutical companies from the perspective of public financiers

2008 ◽  
Vol 14 (4) ◽  
Author(s):  
Laura Heinonen ◽  
Birgitta Sandberg
Keyword(s):  
Risk Management ◽  
Development Process ◽  
Time Perspective ◽  
Investment Decisions ◽  
Product Development Process ◽  
Secondary Sources ◽  
External Finance ◽  
Long Time ◽  
Technical Risks ◽  
Three Stages

The risks faced by biopharmaceutical companies during the process of drug development are multifaceted and complicated. Furthermore, resource intensiveness and the long time perspective force them to rely on external finance. This study describes the risks in the industry along the biopharmaceutical development process and evaluates how public investors take these risks into account in their investment decisions. The empirical study focuses on Finnish public investors. The data consists of both interviews and secondary sources. Biopharmaceutical development is divided into three stages (discovery, development and commercialisation), and the main risks at each stage are identified. The results show that the risk the investors are willing to take is reflected in the stage of the product development process they invest in. Finnish public investors tend to avoid taking commercial risks and thus invest in the early stages of development where there are mainly technical risks involved. They are increasingly emphasising risk management, and they are also keener to emphasise the importance of commercialisation. Paradoxically, however, commercialisation efforts are generally not supported financially.

scholarly journals Estate Taxation, Entrepreneurship, and Wealth

2009 ◽  
Vol 99 (1) ◽  
pp. 85-111 ◽  
Author(s):  
Marco Cagetti ◽  
Mariacristina De Nardi
Keyword(s):  
Small Businesses ◽  
Wealth Distribution ◽  
Investment Decisions ◽  
Wealth Inequality ◽  
Borrowing Constraints ◽  
Welfare Gain ◽  
Business Investment ◽  
Estate Tax ◽  
Estate Taxation ◽  
Fiscal Balance

This paper studies the estate tax in a quantitative framework with business investment, borrowing constraints, estate transmission, and wealth inequality. We find that the estate tax has little effect on the saving and investment decisions of small businesses, but does distort the decisions of larger firms, thereby reducing aggregate output and savings. Removing such distortions by eliminating the estate tax does not necessarily imply that everyone would be better off. If other taxes were raised to reestablish fiscal balance, those at the top of the wealth distribution would experience a large welfare gain, but most of the population would lose. (JEL D31, E21, H2)

scholarly journals Investment Banks as Corporate Monitors in the Early Twentieth Century United States

2017 ◽  
Vol 107 (7) ◽  
pp. 1938-1970 ◽  
Author(s):  
Carola Frydman ◽  
Eric Hilt
Keyword(s):  
United States ◽  
Twentieth Century ◽  
Conflicts Of Interest ◽  
Investment Decisions ◽  
Investment Banks ◽  
Information Flows ◽  
Corporate Boards ◽  
External Finance ◽  
Early Twentieth Century ◽  
Investment Rates

We study the effect of financial relationships on firms' investment decisions and access to external finance. In the early twentieth century, securities underwriters commonly held directorships with American corporations. Section 10 of the Clayton Antitrust Act prohibited bankers from serving on the boards of railroads for which they underwrote securities. We find that following the implementation of Section 10, railroads with strong preexisting relationships with underwriters saw declines in their investment rates, valuations, and leverage, and increases in their costs of external funds. Reassuringly, we do not observe similar effects among industrials and utilities, which were not subject to Section 10. Our results are consistent with underwriters on corporate boards acting as delegated monitors, and highlight the potential for regulations intended to address conflicts of interest to disrupt valuable information flows. (JEL G24, G31, G32, G34, K22, N21, N22)

The Qualitative Relationship Between Banks and SMEs in Wales

2021 ◽  
pp. 175-199
Author(s):  
Atsede Woldie ◽  
Hooman Hagshenas ◽  
Brychan Celfyn Thomas
Keyword(s):  
Asymmetric Information ◽  
Small Businesses ◽  
Order Theory ◽  
The Other ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
External Finance ◽  
Other Hand ◽  
Qualitative Relationship

A long-term or close and intense relationship with banks could help overcome the main problems like asymmetric information. Using collateral is another way to overcome the effects of asymmetric information. The findings show that having collateral does not reduce loan costs, and on the other hand it will increase the availability of finance for small businesses. In general, small businesses use pecking order theory in choosing their formal sources of finance. Because of their lack of knowledge, they are not completely aware of available sources of finance. Banks are the first and most important external finance provider for small businesses, so having a good long-term relationship with banks can help them to overcome problems like asymmetric information, which would influence their access to more finance. Collateral is the other way to access more finance and it can help small businesses in their relationship with banks, especially in a period of unsustainability to reduce the risks for banks.

Sign in / Sign up

Export Citation Format

Share Document