IDEAS home Printed from https://ideas.repec.org/a/ids/ijesbu/v29y2016i3p362-389.html
   My bibliography  Save this article

Effects of bank loan constraints on trade credit use: evidence from micro data of Vietnamese firms

Author

Listed:
  • Thi Thanh Xuan Bui
  • Jean-Laurent Viviani

Abstract

This paper examines the effects of bank loan constraints on the use of trade credit by Vietnamese firms across size with a comparison between large firms and small and medium-sized enterprises (SMEs). We distinguish three types of bank-constrained firms, i.e. credit denied firms, discouraged firms and those with pending applications; and four types of discouraged firms, i.e. those that did not apply for a bank loan because of burdensome loan procedures, strict collateral requirements, high interest rates and expected denial. Using a sample of 1,000 Vietnamese firms from the World Bank Enterprise Survey in 2005, we find that denied large firms use more trade credit by 5.2% whereas denied SMEs use less of it by 6.7%, implying a substitution and complementary effect respectively. Furthermore, our results suggest that discouraged SMEs because of high interest rates use more trade credit whereas discouraged firms because of expected denial use less of it.

Suggested Citation

  • Thi Thanh Xuan Bui & Jean-Laurent Viviani, 2016. "Effects of bank loan constraints on trade credit use: evidence from micro data of Vietnamese firms," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 29(3), pages 362-389.
    • Handle: RePEc:ids:ijesbu:v:29:y:2016:i:3:p:362-389
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=79420
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijesbu:v:29:y:2016:i:3:p:362-389. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=74 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.