Local institutions, external finance and investment decisions of small businesses in Vietnam


This study investigates the impacts of local institutions, external finance, and their joint effects on firm investment in Vietnam. Investment decisions are classified into two categories: fixed asset investment and non-fixed asset investment. Analysing a set of 1.3 million firm-year observations of businesses in Vietnam (2006–2016), we find evidence that local institutions (both formal and informal) positively influence fixed asset investment but negatively affect non-fixed asset investment. Also, we find that informal loans are positively associated with both types of firm investment while bank loans are negatively associated with both types of firm investment. More importantly, we find that the quality of local institutions is able to moderate firms’ external financing behaviour, leading to increased investment values.

Publication DOI: https://doi.org/10.1016/j.ecosys.2021.100880
Divisions: Aston Business School > Economics, Finance & Entrepreneurship
Aston Business School
Additional Information: © 2021, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Uncontrolled Keywords: Informal finance,Informal institutions,Investment,Small business,Vietnam,Economics and Econometrics
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Related URLs: https://linking ... 939362521000285 (Publisher URL)
http://www.scop ... tnerID=8YFLogxK (Scopus URL)
PURE Output Type: Article
Published Date: 2021-09
Published Online Date: 2021-06-15
Accepted Date: 2021-04-21
Authors: Nguyen, Bach (ORCID Profile 0000-0003-1527-7443)



Version: Accepted Version

Access Restriction: Restricted to Repository staff only until 15 December 2022.


Version: Accepted Version

Access Restriction: Restricted to Repository staff only

License: Creative Commons Attribution Non-commercial No Derivatives

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