Proceedings of World Business and Social Science Research Conference
25-25 October, 2013, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-33-7
Small and Medium Sized Enterprises Access to Credit in
Vietnam
Nhung Nguyen1, Christopher Gan2 and Baiding Hu3
Small and medium sized enterprises (SMEs) have been highly conducive
to economic development in Vietnam. SMEs are a mean of income
generation, job creation, poverty reduction, and government revenue
contribution, etc. However, SMEs have lagged far behind other business
sectors in terms of performance. One of the major reasons is their inability
to access credits and this affects their performance. This study investigates
the factors that determine the credit accessibility of SMEs in Vietnam and
the loan interest rate.
Primary data is obtained from a survey of 487 SMEs in Hanoi in June
2013. The empirical frameworks comprise of (1) Logistic Regression to
determine SMEs’ ability to access to credit; and (2) Ordinary Least Square
(OLS) estimation for the interest rate charged on SMEs largest loan.
The results show that the determinants of SMEs credit accessibility include
firm size, owner education, owner gender and SMEs networks with bank
official and customers. Furthermore, loan characteristics, business sectors
(Agriculture, Industry, Trade and Services) and sources of financing
significantly impact the interest rate charged on SMEs largest loans while
the owner characteristics are not important. Interestingly, our results
suggest that network, relationship and connections still have great effect
over the SMEs credit market in Vietnam
Field of research: Economics
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1
Master Student, Faculty of Commerce, Department of Accounting, Finance and Economics,
PO Box 84, Lincoln University, Christchurch, New Zealand, Tel: 64-3-423-0287,
Email: Nhung.Nguyen@lincoln.ac.nz
2
Corresponding Author, Professor, Faculty of Commerce, Department of Accounting, Finance and
Economics, PO Box 84, Lincoln University, Christchurch, New Zealand, Tel: 64-3-423-0337,
Email: Christopher.Gan@lincoln.ac.nz.
3
Senior Lecturer, Faculty of Commerce, Department of Accounting, Finance and Economics,
PO Box 84, Lincoln University, Christchurch, New Zealand, Tel: 64-3-423-0231;
Email: Baiding.Hu@Lincoln.ac.nz
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