Cognitive Financial Constraints and Firm Growth

Jun Du, Bach Nguyen*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This study distinguishes entrepreneurs’ cognitive financial constraints from financial supply constraints and assesses their relative importance to small business growth. Drawing from the literature on cognitive styles and institutional theory, we argue that small businesses’ financial constraints derive not only from financial market failures but also from the cognitive factors of entrepreneurs. Analysing a comprehensive dataset of more than 200,000 small businesses in Vietnam, we show that both financial supply and cognitive financial constraints impede firm growth. Given this significantly deleterious effect, the cognitive financial constraints originating from the demand side of firm financing deserve more attention.
Original languageEnglish
JournalSmall Business Economics
DOIs
Publication statusAccepted/In press - 1 Apr 2021

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