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Financial constraints, bank concentration and SMEs: evidence from Pakistan

Author

Listed:
  • Abubakr Saeed
  • Muhammad Sameer

Abstract

Purpose - – This paper aims to empirically investigate the impact of bank market concentration of financial constraints on firm investment. Design/methodology/approach - – This analysis is based on cross-industries panel of 368 listed Pakistani non-financial firms over the period of 2001-2009. Further, the Generalized Method of Moments estimation technique has been used to estimate the dynamic panel data model. Findings - – By applying a dynamic panel analysis, it was found that small- and medium-sized enterprises (SMEs) are financially constrained in the credit market. The main finding indicates that reduction in bank concentration eases financing constraints, and this effect is more pronounced for SMEs. In addition, while testing the firm opacity in this context, results reveal that opaque firms are more financially constrained, and bank market competition is less favourable to the firms with greater opacity. Originality/value - – The results, first, assess the efficacy of ongoing financial reforms in Pakistan and, second, offer implications for other economies that exhibit financial development similar to that of Pakistan.

Suggested Citation

  • Abubakr Saeed & Muhammad Sameer, 2015. "Financial constraints, bank concentration and SMEs: evidence from Pakistan," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 32(4), pages 503-524, October.
    • Handle: RePEc:eme:sefpps:v:32:y:2015:i:4:p:503-524
    DOI: 10.1108/SEF-02-2014-0046
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    Citations

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    Cited by:

    1. Saira Qasim & Marian Rizov & Xufei Zhang, 2021. "Financial constraints and the export decision of Pakistani firms," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4557-4573, July.
    2. Saira Qasim, 2021. "Financial Constraints across Pakistani Listed Firms," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 10(2), pages 57-69, April.
    3. Jonathan A. Batten & Xuan Vinh Vo, 2016. "Bank risk shifting and diversification in an emerging market," Risk Management, Palgrave Macmillan, vol. 18(4), pages 217-235, December.
    4. Mehmet Civelek & Ibrahim Dursun & Ashiqur Rahman, "undated". "How Perceptions of Bank Financing Constraints Differ Among Characteristics of SMEs: Evidence from Turkey," Review of Socio - Economic Perspectives 201818, Reviewsep.

    More about this item

    Keywords

    Investment; Financial constraints; O12; O16; G21;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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