Capital allocation, credit access, and firm growth in Vietnam

In this chapter, the authors explore the relationship between firm growth, access to finance, and the efficiency of capital allocation in Vietnam over 2005–15. They test whether firms with higher marginal returns to capital are more or less likely to get access to financing. This is a key test of how efficiently the financial system is functioning. The authors also test whether credit supply constraints are hindering capital allocation by limiting the investment and employment activities of firms with the highest marginal return on capital. They find that high return investors, with the greatest marginal return on capital, have a lower likelihood of having formal finance (loans outstanding with formal credit institutions). The study finds evidence that rejected credit applications are limiting investment activity but not employment, particularly for firms with higher investment efficiency. This suggests a link between firm growth and a suboptimal allocation of credit.

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Stock Liquidity and Frim Investment—Evidence from Chinese Listed Companies*

Journal of Business Theory and Practice ◽

10.22158/jbtp.v4n1p25 ◽

2016 ◽

Vol 4 (1) ◽

pp. 25

Author(s):

Jiacai Xiong

Keyword(s):

Information Disclosure ◽

Firm Growth ◽

Capital Allocation ◽

Inside Trading ◽

Chinese Government ◽

Firm Investment ◽

Stock Liquidity ◽

Good Investment ◽

Investment Opportunities ◽

The Relationship

From the perspective of market microstructure, this paper investigates the relationship between stock liquidity, firm investment and capital allocation efficiency. This paper finds that firm investment is positively related to stock liquidity. Moreover, financial constraint, firm growth and risk affect the relationship between firm investment and stock liquidity. In addition, stock liquidity can help firm better utilize investment opportunities, indicated by higher investment and Tobin’ Q sensitivities. We also show that firms with good liquidity can lower the investment and Tobin’s Q sensitivities when there are no good investment opportunities. The findings of this paper indicate that stock liquidity have positive effect on firm investment. Therefore, to strengthen the effectiveness of stock liquidity, the Chinese government should continue to reform ownership structure and corporate governance, strengthen information disclosure and stepped up its crackdown against inside trading.

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HETEROGENEOUS EFFECTS OF CREDIT ACCESS ON FORMAL AND INFORMAL FIRM GROWTH: EMPIRICAL EVIDENCE FROM VIETNAM

The Singapore Economic Review ◽

10.1142/s0217590819500723 ◽

2020 ◽

Vol 65 (05) ◽

pp. 1185-1211 ◽

Cited By ~ 1

Author(s):

TRINH QUANG LONG ◽

PETER JOHN MORGAN ◽

MINH BINH TRAN

Keyword(s):

Fixed Effects ◽

Firm Growth ◽

Causal Effect ◽

High Growth ◽

Firm Level ◽

Credit Access ◽

Access To Credit ◽

Heterogeneous Effects ◽

Level Data ◽

Growth Firms

This paper examines the causal effect of credit access on firm growth (measured by employment growth), using a unique micro-, small-, and medium-sized firm-level data collected every two years in Vietnam from 2005 to 2013. The results obtained from fixed-effects (FE) and FE with instrumental variable estimators show that firms with credit access experience a higher growth than firms without credit access. We also find that access to credit is positively associated with both formal and informal firm growth, but the results for formal firms seem to be driven by some high growth firms (and rapidly shrinking firms). The effect of credit access on firm growth is also heterogeneous by firm size and firm age in both types of firms.

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Access to Rural Credit Markets in Developing Countries, the Case of Vietnam: A Literature Review

Sustainability ◽

10.3390/su11051468 ◽

2019 ◽

Vol 11 (5) ◽

pp. 1468 ◽

Cited By ~ 11

Author(s):

Ta Linh ◽

Hoang Long ◽

Le Chi ◽

Le Tam ◽

Philippe Lebailly

Keyword(s):

Developing Countries ◽

Literature Review ◽

Poverty Reduction ◽

Credit Markets ◽

Emerging Market ◽

Secondary Data ◽

Capital Allocation ◽

Credit Access ◽

Rural Credit ◽

Rural Credit Markets

Agricultural sectors play an important role in the process of economic development of a country, especially in developing ones. Vietnam is known as an emerging market, which depends directly on agriculture-related activities for their livelihood, in which the issue of rural credit access still remains a confounding problem. The paper focuses on the characteristics of rural credit markets, the determinants of farmer access to the markets, the socio-economic impacts of credit access in Vietnam and briefly comparing with those of some developing countries. This question is addressed by reviewing existing literature and empirical evidence, followed by a comprehensive case study in Vietnam. Comprehensive literature review with secondary data collection and key informant interviews are methods that are applied in this research. The results of this analysis indicate the features of Vietnam markets as participated constraints, government intervention, and segmentation. Other results reveal the significant determinants of credit accessibility. Impacts of credit access on output production, household income, and poverty reduction are highlighted in this paper. Some managerial implications are recommended for households through participation in lending networks; for financial institutions relating to expand target clients as well as capital allocation; and, for policy-makers via ensuring market competitiveness and sustainable development in the long run.

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KETERANGKUMAN KEWANGAN DAN PERTUMBUHAN FIRMA DI MALAYSIA DAN INDONESIA: ANALISIS REGRESI AMBANG (Financial Inclusion and Firm Growth in Malaysia and Indonesia: A Threshold Regression Analysis)

International Journal of Management Studies ◽

10.32890/ijms.27.1.2020.7641 ◽

2020 ◽

Vol 27 ◽

Author(s):

Zulkefly Abdul Karim ◽

Rosmah Nizam ◽

Tamat Sarmidi ◽

Aisyah Abdul Rahman

Keyword(s):

Financial Services ◽

Firm Growth ◽

Threshold Level ◽

Financial Inclusion ◽

Threshold Estimation ◽

Credit Access ◽

Access To Credit ◽

Banking Institutions ◽

The Impact ◽

Threshold Point

Kertas ini bertujuan untuk mengkaji kesan keterangkuman kewangan terhadap pertumbuhan firma dalam kalangan firma kecil, sederhana dan besar (275 buah firma) di negara Malaysia dan Indonesia dengan menggunakan teknik penganggaran regresi ambang keratan rentas. Tahap keterangkuman kewangan diukur berdasarkan agihan perkhidmatan kewangan merentasi firma iaitu akses kepada kredit. Keputusan kajian mendapati wujud kesan tidak monotonik dalam hubungan antara keterangkuman kewangan dan pertumbuhan firma, yang mana kesan keterangkuman kewangan terhadap pertumbuhan firma hanya signifikan dan positif di bawah tahap ambang. Implikasi dasar daripada kajian ini mencadangkan pemilik firma dan institusi kewangan perlu mengekang pengagihan akses kepada kredit supaya berada dalam lingkungan nilai optimum atau tahap ambang untuk menjamin pertumbuhan firma. Abstract This paper aims to investigate the effects of financial inclusion on the firms’ growth from selected small, medium and large firms (275 firms) in Malaysia and Indonesia countries using a cross section threshold estimation technique. The levels of financial inclusion across firms were measured based on the distribution of financial services across the selected firms (access to credit). This paper reveals that there is a non-monotonic effect in the financial inclusion-firm’s growth nexus in which the impact of financial inclusion on firm growth is significantly positive below a certain threshold point. The main finding suggest that the firms’ owners and banking institutions should restrict the distribution of credit access within the optimum value or threshold level in promoting the growth of the firms. Keywords: Financial inclusion; firm growth; threshold estimation.

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The Effect of Taxation and Corruption on Firm Growth: An Empirical Investigation for Vietnam

Journal of Economics and Development ◽

10.33301/2016.18.03.01 ◽

2016 ◽

pp. 5-29

Author(s):

Bich Le Thi Ngoc

Keyword(s):

International Development ◽

Firm Growth ◽

Empirical Investigation ◽

Manufacturing Firms ◽

Economic Management ◽

Tax Rate ◽

Percentage Point Increase ◽

Percentage Points ◽

Point Increase ◽

The Impact

The aim of this study is to analyze empirically the impact of taxation and corruption on the growth of manufacturing firms in Vietnam. The study employed pooled OLS estimation and then instrument variables with fixed effect for the panel data of 1377 firms in Vietnam from 2005 to 2011. These data were obtained from the survey of the Central Institute for Economic Management and the Danish International Development Agency. The results show that both taxation and corruption are negatively associated with firm growth measured by firm sales adjusted according to the GDP deflator. A one-percentage point increase in the bribery rate is linked with a reduction of 16,883 percentage points in firm revenue, over four and a half times bigger than the effect of a one-percentage point increase in the tax rate. From the findings of this research, the author recommends the Vietnam government to lessen taxation on firms and that there should be an urgent revolution in anti-corruption policies as well as bureaucratic improvement in Vietnam.

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