Abstract
Purpose – Corruption has been evidenced as one of the major factors that drive a firm’ s dynamics and growth. This study examines the relationship between corruption and financing structure decisions of small and medium-sized enterprises (SMEs) in Vietnam. Design/methodology/approach – The authors use a longitudinal data set from the Vietnam’ s SME Survey in the period 2007–2013 and adopt the two-stage least squares method to deal with endogeneity. Findings – After controlling for endogeneity and firm heterogeneity, the authors find that, overall, corruption does significantly affect the decisions of financing sources. Given that, corruption increases the use of informal debt and decreases the levels of formal debt, owner’ s equity and retained earnings. Practical implications – The findings suggest implications for corruption-combating actions and policies. Originality/value – Different from previous studies that either provide evidence of government corruption and a firm’ s capital structure at the country level or focus on corruption and debt only, we deliver a more comprehensive analysis on the nexus between corruption and various financing sources.
Keywords
Informal payments, Financing channels, SMEs, Vietnam, 2SLS, Endogeneity
Publisher
Kinh Tế Quốc Dân???dc.relation.reference???
ADB (2013), Proposed Policy-Based Loan for Subprogram 2 Socialist Republic of Viet Nam: Second Small and Medium-Sized Enterprises Development Program, Report and Recommendation of the President to the Board of Directors, Project Number: 41360, Asian Development Bank, Manila. ADB (2019), Asian Development Outlook 2019 Update: Fostering Growth and Inclusion in Asia’s Cities, Asian Development Bank, Manila. ADB (2018), Proposed Loan Joint Stock Commercial Bank for Investment and Development of Vietnam: Mainstreaming Small and Medium-Sized Enterprises Lending Project (Viet Nam), Asian Development Bank, Manila. Archer, L.T. (2019), “Formality and financing patterns of small and medium-sized enterprises in Vietnam”, Emerging Markets Finance and Trade, pp. 1-18. Atieno, R. (2009), Linkages, Access to Finance and the Performance of Small-Scale Enterprises in Kenya, Research paper No. 2009.06/UNU-WIDER. Barslund, M. and Tarp, F. (2008), “Formal and informal rural credit in four provinces of Vietnam”, The Journal of Development Studies, Vol. 44 No. 4, pp. 485-503. Baum, C., Schaffer, M. and Stillman, S. (2007), IVENDOG: Stata Module to Calculate Durbin-WuHausman Endogeneity Test after Ivreg, Boston College Department of Economics. Beck, T. (2007), “Financing constraints of SMEs in developing countries: evidence, determinants and solutions”, KDI 36th Anniversary International Conference, pp. 26-27. Beck, T., Demirguç-Kunt, A. and Maksimovic, V. (2008),€ “Financing patterns around the world: are small firms different?”, Journal of Financial Economics, Vol. 89 No. 3, pp. 467-487. Breusch, T., Ward, M.B., Nguyen, H.T.M. and Kompas, T. (2011), “On the fixed-effects vector decomposition”, Political Analysis, Vol. 19 No. 2, pp. 123-134. Butler, A.W., Fauver, L. and Mortal, S. (2009), “Corruption, political connections, and municipal finance”, The Review of Financial Studies, Vol. 22 No. 7, pp. 2873-2905. Chang, C., Chen, X. and Liao, G. (2014), “What are the reliably important determinants of capital structure in China?”, Pacific-Basin Finance Journal, Vol. 30, pp. 87-113. CIEM (2014), Characteristics of the Vietnamese Business Environment: Evidence from the SME Survey in 2013, Central Institute for Economic Management, Hanoi. Ciocchini, F., Durbin, E. and Ng, D.T. (2003), “Does corruption increase emerging market bond spreads?”, Journal of Economics and Business, Vol. 55 Nos 5-6, pp. 503-528. De Jong, A., Kabir, R. and Nguyen, T.T. (2008), “Capital structure around the world: the roles of firmand country-specific determinants”, Journal of Banking and Finance, Vol. 32 No. 9, pp. 1954-1969. Du, J. (2008), “Corruption and corporate finance patterns: an international perspective”, Pacific Economic Review, Vol. 13 No. 2, pp. 183-208. Fan, J.P., Titman, S. and Twite, G. (2012), “An international comparison of capital structure and debt maturity choices”, Journal of Financial and Quantitative Analysis, Vol. 47 No. 1, pp. 23-56. Foellmi, R. and Oechslin, M. (2007), “Who gains from non-collusive corruption?”, Journal of Development Economics, Vol. 82 No. 1, pp. 95-119. Harris, M. and Raviv, A. (1991), “The theory of capital structure”, The Journal of Finance, Vol. 46 No. 1, pp. 297-355. Jain, P.K., Kuvvet, E. and Pagano, M.S. (2017), “Corruption’s impact on foreign portfolio investment”, International Business Review, Vol. 26 No. 1, pp. 23-35. Johnson, S. and Mitton, T. (2003), “Cronyism and capital controls: evidence from Malaysia”, Journal of Financial Economics, Vol. 67 No. 2, pp. 351-382. Le, T.N.B. (2016), “The effect of taxation and corruption on firm growth: an empirical investigation for Vietnam”, Journal of Economics and Development, Vol. 18 No. 3, pp. 5-29. Lemma, T.T. (2015), “Corruption, debt financing and corporate ownership”, Journal of Economic Studies, Vol. 42 No. 3, pp. 433-461. Liu, Q., Lu, R. and Ma, X. (2015), “Corruption, financial resources and exports”, Review of International Economics, Vol. 23 No. 5, pp. 1023-1043. Luo, Y. (2005), “An organizational perspective of corruption”, Management and Organization Review, Vol. 1 No. 1, pp. 119-154. Mehnaz, S. and Wimpey, J. (2007), “When do enterprises prefer informal credit?”, World Bank Policy Research Working Paper, No. 4435. Myers, S.C. (1984), “The capital structure puzzle”, The Journal of Finance, Vol. 39 No. 3, pp. 574-592. Nguyen, T.L. and Phan, H.M. (2015), “Above-average debt ratio and the relationship with return on equity: the case of the Vietnamese listed seafood enterprises”, Journal of Economics and Development, Vol. 17 No. 1, pp. 50-74. Nguyen, T.H.T. and To, T.T. (2019), “Determinants of the accessibility of Vietnamese enterprises to capital from banks and credit institutions”, Journal of Economics and Development, Vol. 21, pp. 81-95. Nguyen, T.L., Phan, H.M. and Bui, B.K. (2016), “Liabilities and the impacts on financial performance of the Vietnamese listed small and medium-sized enterprises”, Journal of Economics and Development, Vol. 18 No. 3, pp. 41-63. Nguyen, L.T., Hoai Nguyen, A.P., Van Passel, S., Azadi, H. and Lebailly, P. (2018), “Access to preferential loans for poverty reduction and rural development: evidence from Vietnam”, Journal of Economic Issues, Vol. 52 No. 1, pp. 246-269. Oncioiu, I. (2012), “Small and medium enterprises’ access to financing – a European concern: evidence from Romanian SME”, International Business Research, Vol. 5 No. 8, pp. 47-58. Ou, C. and Haynes, G.W. (2006), “Acquisition of additional equity capital by small firms–findings from the national survey of small business finances”, Small Business Economics, Vol. 27 No. 2-3, pp. 157-168. Pham, T. and Talavera, O. (2018), “Discrimination, social capital, and financial constraints: the case of Viet Nam”, World Development, Vol. 102, pp. 228-242. Rahaman, M.M. (2011), “ Access to financing and firm growth” , Journal of Banking and Finance, Vol. 35 No. 3, pp. 709-723. Rajan, R.G. and Zingales, L. (1995), “What do we know about capital structure? Some evidence from international data”, The Journal of Finance, Vol. 50 No. 5, pp. 1421-1460. Rand, J. (2007), “Credit constraints and determinants of the cost of capital in Vietnamese manufacturing”, Small Business Economics, Vol. 29 Nos 1-2, pp. 1-13. Rand, J. and Tarp, F. (2012), “Firm-level corruption in Vietnam”, Economic Development and Cultural Change, Vol. 60 No. 3, pp. 571-595. Rand, J. and Torm, N. (2012), “The benefits of formalization: evidence from Vietnamese manufacturing SMEs”, World Development, Vol. 40 No. 5, pp. 983-998. Tonoyan, V., Strohmeyer, R., Habib, M. and Perlitz, M. (2010), “Corruption and entrepreneurship: how formal and informal institutions shape small firm behaviour in transition and mature market economies”, Entrepreneurship: Theory and Practice, Vol. 34 No. 5, pp. 803-832. Tran, H.T. and Santarelli, E. (2013), “Capital constraints and the performance of entrepreneurial firms in Vietnam”, Industrial and Corporate Change, Vol. 23 No. 3, pp. 827-864. Van Vu, H., Tran, T.Q., Van Nguyen, T. and Lim, S. (2018), “Corruption, types of corruption and firm financial performance: new evidence from a transitional economy”, Journal of Business Ethics, Vol. 148 No. 4, pp. 847-858. Vial, V. and Hanoteau, J. (2010), “Corruption, manufacturing plant growth, and the Asian paradox: Indonesian evidence”, World Development, Vol. 38 No. 5, pp. 693-705. Wang, Y. and You, J. (2012), “Corruption and firm growth: evidence from China”, China Economic Review, Vol. 23 No. 2, pp. 415-433. Whited, T.M. and Wu, G. (2006), “Financial constraints risk”, The Review of Financial Studies, Vol. 19 No. 2, pp. 531-559. Wooldridge, J.M. (2010), Econometric Analysis of Cross Section and Panel Data, MIT Press. World Bank (2016), Vietnam 2035: Toward Prosperity, Creativity, Equity, and Democracy, World Bank, Washington, DC.
ADB (2013), Proposed Policy-Based Loan for Subprogram 2 Socialist Republic of Viet Nam: Second Small and Medium-Sized Enterprises Development Program, Report and Recommendation of the President to the Board of Directors, Project Number: 41360, Asian Development Bank, Manila. ADB (2019), Asian Development Outlook 2019 Update: Fostering Growth and Inclusion in Asia’s Cities, Asian Development Bank, Manila. ADB (2018), Proposed Loan Joint Stock Commercial Bank for Investment and Development of Vietnam: Mainstreaming Small and Medium-Sized Enterprises Lending Project (Viet Nam), Asian Developme...See More
Appears in Collections: | 02. Tạp chí (Tiếng Anh)
|
