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 I show that 14 percent of the enterprises are credit constrained, and these enterprises would increase their debt holdings by 34 percent 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.
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Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number
05-01.
Length: 20 pages Date of creation: Dec 2004 Date of revision: Handle: RePEc:kud:kuiedp:0501
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Find related papers by JEL classification: O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Arne Bigsten & Paul Collier & Stefan Dercon & Marcel Fafchamps & Bernard Gauthier & Jan Willem Gunning & Abena Oduro & Remco Oostendorp & Cathy Patillo & Måns S–derbom & Francis Teal & Albert , 2003.
"Credit Constraints in Manufacturing Enterprises in Africa,"
Journal of African Economies,
Oxford University Press, vol. 12(1), pages 104-125, March.
Other versions:
Bigsten, A. & Collier, P. & Dercon, S. & Fafchamps, M. & Gauthier, B. & Gunning, J.W. & Soderbom, M. & Oduro, A. & Oostendorp, R. & Patillo, C. & Teal, F. & Zeufack, A., 2000.
"Credit Constraints in Manufacturing Enterprises in Africa,"
Working Papers Series
2000-24, Centre for the Study of African Economies, University of Oxford.