TY - JOUR
T1 - The Relative Importance of Regional Institutions and External Finance for Small Business Investment: Evidence from Vietnam
AU - Nguyen, Bach
N1 - The final publication is available via Cambridge Journals Online at:
https://doi.org/10.1017/S174413742000017X
PY - 2020/12/1
Y1 - 2020/12/1
N2 - This study examines the relative importance of local institutions and external finance on small business investment. Utilising the institutional theory, we argue that local institutions and external finance have heterogeneous effects on firm investment. More importantly, they may interact and moderate each other. Analysing a set of 1.3 million observations of small businesses operating in Vietnam (2006-2016) obtained from the Annual Enterprise Survey data from the Vietnam Statistics Office, we find that local institutional settings and external finance are important determinants of firm investment. Moreover, local institutions are able to moderate the effects of external finance on firm investment. As such, this study asserts that conventional models cannot discern whether institutions or external finance are more important to firm investment. Rather, the relative importance of institutions and external finance should be investigated from the perspective of their interaction.
AB - This study examines the relative importance of local institutions and external finance on small business investment. Utilising the institutional theory, we argue that local institutions and external finance have heterogeneous effects on firm investment. More importantly, they may interact and moderate each other. Analysing a set of 1.3 million observations of small businesses operating in Vietnam (2006-2016) obtained from the Annual Enterprise Survey data from the Vietnam Statistics Office, we find that local institutional settings and external finance are important determinants of firm investment. Moreover, local institutions are able to moderate the effects of external finance on firm investment. As such, this study asserts that conventional models cannot discern whether institutions or external finance are more important to firm investment. Rather, the relative importance of institutions and external finance should be investigated from the perspective of their interaction.
KW - Local government
KW - Vietnam
KW - informal loans
KW - institutional settings
KW - investment
UR - https://www.cambridge.org/core/journals/journal-of-institutional-economics/article/relative-importance-of-regional-institutions-and-external-finance-for-small-business-investment-evidence-from-vietnam/06730EAEC0E87ED666F60B2B66C6A6D2
UR - http://www.scopus.com/inward/record.url?scp=85084728717&partnerID=8YFLogxK
U2 - 10.1017/S174413742000017X
DO - 10.1017/S174413742000017X
M3 - Article
SN - 1744-1374
VL - 16
SP - 911
EP - 929
JO - Journal of Institutional Economics
JF - Journal of Institutional Economics
IS - 6
ER -