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Capital allocation, credit access, and firm growth in Vietnam

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  • Christina Kinghan
  • Carol Newman
  • Conor M. O'Toole

Abstract

In this paper, we explore the relationship between firm growth, access to finance, and the efficiency of capital allocation in Vietnam over the period 2005-2015. Using data from the UNU-WIDER Vietnam SME survey, we test whether firms with higher marginal returns to capital are more or less likely to get access to financing. This is a key test of how efficiently the financial system is functioning. We also test whether credit supply constraints are hindering capital allocation by limiting the investment and employment activities of firms with the highest marginal return on capital.

Suggested Citation

  • Christina Kinghan & Carol Newman & Conor M. O'Toole, 2018. "Capital allocation, credit access, and firm growth in Vietnam," WIDER Working Paper Series wp-2018-67, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2018-67
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    Cited by:

    1. Szabó, Zsolt, 2019. "Elbátortalanodott hiteligénylők a vállalati szektorban [Discouraged borrowers in the corporate sector]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1145-1186.
    2. Thang Bach & Charles Harvie & Thanh Le, 2021. "How credit constraints affect small and medium enterprises' strategic employment decisions and employees' labour outcomes: Evidence from Vietnam1," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 29(2), pages 319-341, April.

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