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The Impact of Networking on Bank Financing: The Case of Small and Medium–Sized Enterprises in Vietnam

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  • Ngoc T.B. Le
  • Thang V. Nguyen

Abstract

It is argued that networking is crucial for small and medium–sized enterprises (SMEs), particularly in emerging economies as they seek to access resources for development. One key resource in emerging economies is bank financing. In this paper, we develop a model that examines the net effect of different network ties on bank financing to private SMEs. The results support our hypothesis that different network ties influence SMEs‘ use of bank loans in different ways. Specifically, networking with customers and government officials promotes the use of bank loans, while networking with suppliers and social ties reduces the need for bank loans. This study provides a number of research and managerial implications, which are discussed at the end of the paper.

Suggested Citation

  • Ngoc T.B. Le & Thang V. Nguyen, 2009. "The Impact of Networking on Bank Financing: The Case of Small and Medium–Sized Enterprises in Vietnam," Entrepreneurship Theory and Practice, , vol. 33(4), pages 867-887, July.
    • Handle: RePEc:sae:entthe:v:33:y:2009:i:4:p:867-887
    DOI: 10.1111/j.1540-6520.2009.00330.x
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    3. Mai, Nhat Chi, 2022. "Capital Raising and Management of Vietnamese Small and Medium Sized Enterprises after Integrating into Global Economy," OSF Preprints dv68m, Center for Open Science.
    4. Luo, Jinbo & Liu, Qigui, 2020. "Corporate social responsibility disclosure in China: Do managerial professional connections and social attention matter?," Emerging Markets Review, Elsevier, vol. 43(C).
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    6. Guo, Junyan & Fang, Hanqing & Liu, Xuexin & Wang, Cizhi & Wang, Yuan, 2023. "FinTech and financing constraints of enterprises: Evidence from China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 82(C).
    7. Guo, Hongling & Sun, Yue & Qiu, Xuemei, 2021. "Cross-shareholding network and corporate bond financing cost in China," The North American Journal of Economics and Finance, Elsevier, vol. 57(C).
    8. Caselli, Stefano & Corbetta, Guido & Cucinelli, Doriana & Rossolini, Monica, 2021. "A survival analysis of public guaranteed loans: Does financial intermediary matter?," Journal of Financial Stability, Elsevier, vol. 54(C).
    9. Sun, Jinyun & Maksimov, Vladislav & Wang, Stephanie Lu & Luo, Yadong, 2021. "Developing compositional capability in emerging-market SMEs," Journal of World Business, Elsevier, vol. 56(3).
    10. Torres de Oliveira, Rui & Nguyen, Tam & Liesch, Peter & Verreynne, Martie-Louise & Indulska, Marta, 2021. "Exporting to escape and learn: Vietnamese manufacturers in global value chains," Journal of World Business, Elsevier, vol. 56(4).

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