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Investment Financing and Financial Development: Firm Level Evidence from Vietnam

Author

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  • Conor O'Toole

    () (Department of Economics, Trinity College Dublin; Department of Agricultural Economics and Farm Surveys, Teagasc; Economic Analysis Division, Economic and Social Research Institute, Ireland)

  • Carol Newman

    () (Department of Economics and Institute for International Integration Studies, Trinity College Dublin)

Abstract

We explore whether financial development reduces external investment financing constraints for firms. Within-country provincial measures of financial development are linked to investment usingdata from the Vietnamese enterprise survey (VES). We focus on three main aspects of financialdevelopment: financial sector depth, state interventionism in finance, and the degree of marketdriven financing in the economy. We find that financial development reduces investment financing constraints. Constraints are decreasing in credit to the private sector, increasing in the use of finance by state-owned enterprises and decreasing in the degree to which finance is allocated on commercial market terms.

Suggested Citation

  • Conor O'Toole & Carol Newman, 2012. "Investment Financing and Financial Development: Firm Level Evidence from Vietnam," The Institute for International Integration Studies Discussion Paper Series iiisdp409, IIIS.
  • Handle: RePEc:iis:dispap:iiisdp409
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    Cited by:

    1. Casey, Eddie & O'Toole, Conor, 2013. "Bank-lending constraints and alternative financing during the financial crisis: Evidence from European SMEs," Papers WP450, Economic and Social Research Institute (ESRI).
    2. O'Toole, Conor M. & Morgenroth, Edgar L.W. & Ha, Thuy T., 2016. "Investment efficiency, state-owned enterprises and privatisation: Evidence from Viet Nam in Transition," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 93-108.
    3. repec:eee:riibaf:v:45:y:2018:i:c:p:134-149 is not listed on IDEAS

    More about this item

    Keywords

    Financial development; Financing constraints; Investment;

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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