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Category: Business and Industry
Date Submitted: 05/31/2014 01:36 AM
Dinh Thi Thanh Binh
Nguyen Huu Thinh
Hue, 18th-19th June 2013
DETERMINANTS TO THE CREDIT ACCESSIBILITY
OF SMEs IN VIETNAM
Dinh Thi Thanh Binh*
Nguyen Huu Thinhâ€
Abstract: This paper applies the logit model to estimate the determinants affecting
credit accessibility of small and medium enterprises (SMEs) in Vietnam. We exploit
the cross-sectional data of SMEs surveyed by the World Bank in 2009. The estimated
results reveal that the characteristics of SMEs such as total sales and structure of
capital sources have quite strong effects to credit accessibility of SMEs in Vietnam.
Meanwhile, SMEs that ever had overdraft loans can more easily borrow money from
banks. Further, we also show that SMEs operating in manufacturing sector have higher
probability to obtain loans from banks. Finally, compared with SMEs in Red River
Delta area, SMEs located in North Central Coast can get loans from the banks more
easily, but it is more difficult for SMEs in Southeast regions to get banking credits.
Key words: Credit access, SME, Vietnam
JEL Classification:
* Lecturer, Faculty of International Economics, Foreign Trade University, Vietnam
†The last-year student, Faculty of International Economics, Foreign Trade University, Vietnam
1
1. Introduction During the 1980s, Vietnam experienced severe shortages of food and basic consumer goods, a high budget deficit, three-digit inflation, chronic trade imbalances and deteriorating living standards. The economic stagnation forced the Vietnamese government to initiate an overall economic reform from a planned economy to a market economy in 1986. The main task of the reform program is to encourage development of private sector and to reduce the dependence of the overall economy on inefficient state-owned enterprises. In 2011, private economic sector in Vietnam contributed 62% of the GDP of which the contribution of SMEs is 77%, equivalent to 48% of the GDP (Source: General Statistics Office of Vietnam). In 2010, SMEs...