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Government support and firm financial performance: New evidence from a transitional economy

Author

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  • Nguyen Trong, Co
  • Vu Van, Huong
  • Bartolacci, Francesca

Abstract

Using a panel dataset of five waves of private manufacturing SMEs surveys in the period 2007-15, this paper contributes to literature by considering for the first time the effects of government support on firms’ financial performance in Vietnam. Interestingly, contrary to the many findings of previous studies, we find that government assistance affect firms’ financial performance after controlling for heterogeneity, unobservable factors and dynamic endogeneity. This finding supports for the viewpoints of institutional theory. Also, the study shows that technical supports from government such as export promotion, human resource training and technology programmes have insignificant linkages with firm financial performance, but financial supports play an important role, suggesting that supporting measures as tax exemptions, soft loans and investment incentives promote financial efficiency and are vital for the development of Vietnamese private SMEs.

Suggested Citation

  • Nguyen Trong, Co & Vu Van, Huong & Bartolacci, Francesca, 2017. "Government support and firm financial performance: New evidence from a transitional economy," MPRA Paper 81752, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:81752
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Government support; innovation; firm financial performance; SMEs; Vietnam;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G3 - Financial Economics - - Corporate Finance and Governance

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