Title: Are Financing Constraints Obstacles for Economic Growth: Evidence from Vietnam
Abstract: Using a comprehensive panel of 99,307 Vietnamese firms over the period 2000-2012, this paper examines the impact of financing constraints on the funding portfolios (comprising internal and external sources) adopted by private enterprises for their new investments. Our findings make three important contributions to corporate finance literature. First, in a financially healthy circumstance, firms prefer internal funding to external loans; but in a financially distressed situation, they turn out to be less sensitive to borrowing costs. Second, when firms become older and larger, they do not necessarily switch to external financing as suggested in the literature. In fact, the extent of borrowing depends on firms' performance and their capital need. Finally, we find that financing constraints cannot be the main obstacles of firm growth.
Publication Year: 2015
Publication Date: 2015-01-01
Language: en
Type: article
Indexed In: ['crossref']
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