TY - JOUR
T1 - Credit Constraints and Determinants of the Cost of Capital in Vietnamese Manufacturing
AU - Rand, John
N1 - JEL Classification: O16, O53
PY - 2007
Y1 - 2007
N2 - This paper examines the extent to which borrowing constraints restrict firm access to credit and identifies individual, firm, and loan characteristics, which determine the cost of capital in Vietnamese manufacturing. Using direct information from a Vietnamese enterprise survey the paper shows that between 14 and 25% of the enterprises are credit constrained, and these enterprises would increase their debt holdings by between 40 and 115% if borrowing constraints were relaxed. Moreover, it emerges that informal credit markets play an important role for fast growing firms. Enterprises do not appear to have the necessary time to go through the many administrative difficulties in the formal credit system if they want to "seize the day". Finally, collateralized loans face larger interest rates, explained by the significant influence of "policy lending" in Vietnamese credit markets
AB - This paper examines the extent to which borrowing constraints restrict firm access to credit and identifies individual, firm, and loan characteristics, which determine the cost of capital in Vietnamese manufacturing. Using direct information from a Vietnamese enterprise survey the paper shows that between 14 and 25% of the enterprises are credit constrained, and these enterprises would increase their debt holdings by between 40 and 115% if borrowing constraints were relaxed. Moreover, it emerges that informal credit markets play an important role for fast growing firms. Enterprises do not appear to have the necessary time to go through the many administrative difficulties in the formal credit system if they want to "seize the day". Finally, collateralized loans face larger interest rates, explained by the significant influence of "policy lending" in Vietnamese credit markets
KW - Faculty of Social Sciences
KW - credit constraints
KW - Vietnam
U2 - 10.1007/s11187-005-1161-2
DO - 10.1007/s11187-005-1161-2
M3 - Journal article
SN - 0921-898X
VL - 29
SP - 1
EP - 13
JO - Small Business Economics
JF - Small Business Economics
IS - 1-2
ER -