Local financial development and the growth of small firms in Vietnam

authored by: Viet T. Tran, Yabibal M. Walle, Helmut Herwartz, Trung Thanh Nguyen
Abstract: This paper examines whether heterogeneities in financial development among Vietnamese provinces matter for firm growth in Vietnam. Using a nationally representative firm survey that covers more than 41,000 firms for the period 2009 − 2013, we estimate the impact of provincial financial development on the growth rates of firms by accounting for sectoral differences in growth opportunities. We find that province-level financial development promotes the growth rates of sales, investment and sales per worker of small firms, and reduces the growth rate of the wage-to-sales ratio. Our results imply that firms grow faster in provinces with a higher level of financial development. Moreover, the effect of financial development on growth rates is larger when firms operate in sectors with better growth opportunities.
Organisation(s): Institute of Environmental Economics and World Trade
External Organisation(s): University of Göttingen
Vietnam National University of Forestry
German Institute of Development and Sustainability (IDOS)
Type: Article
Journal: Journal of the Asia Pacific Economy
Volume: 29
Pages: 1564-1598
No. of pages: 35
ISSN: 1354-7860
Publication date: 2024
Publication status: Published
Peer reviewed: Yes
ASJC Scopus subject areas: Geography, Planning and Development, Development, Political Science and International Relations
Sustainable Development Goals: SDG 8 - Decent Work and Economic Growth
Electronic version(s): https://doi.org/10.1080/13547860.2022.2109379 (Access: Closed)