The role of institutional environment in financing decisions of small and medium firms in developing and transition economies
Financing for SMEs is one of the biggest constraint in their growth, the extent of which differs across countries. As per the various research done, SMEs’ financing is influenced by firm specific and country specific factors. This study attempts to presents a critical review of literature on mul...
| Main Author: | |
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| Format: | Dissertation (University of Nottingham only) |
| Language: | English |
| Published: |
2018
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| Online Access: | https://eprints.nottingham.ac.uk/54331/ |
| _version_ | 1848799039055724544 |
|---|---|
| author | Han, Yong Wah |
| author_facet | Han, Yong Wah |
| author_sort | Han, Yong Wah |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | Financing for SMEs is one of the biggest constraint in their growth, the extent of which differs across countries. As per the various research done, SMEs’ financing is influenced by firm specific and country specific factors.
This study attempts to presents a critical review of literature on multiple themes pertaining to the role of institutional environment in financing decisions of small and medium firms, and formulates the hypotheses which identify and tests the significance of the country and firm variables in influencing the financing decision of SMEs in developing and transition economies by using the World Bank’s Enterprise Survey database which covers 133,090 firms from 123 developing countries.
The OLS regression is used to identify the impact of firm-specific and country specific factors on the proportion of investment financed by bank loan. The results show that size and the age of the SMEs have a significant and positive impact on the proportion of investment financed by bank loan. We also study the impact of foreign ownership of SMEs on the proportion of investment financed by bank loan and find that domestic owned SMEs use more bank financing than foreign owned SMEs.
From the country specific factors perspective, we observed that the SMEs in countries with better legal environment, lower corruption and higher availability of credit use more bank financing. Our results support both the pecking order and trade off theories. |
| first_indexed | 2025-11-14T20:29:19Z |
| format | Dissertation (University of Nottingham only) |
| id | nottingham-54331 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T20:29:19Z |
| publishDate | 2018 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-543312019-02-08T12:46:39Z https://eprints.nottingham.ac.uk/54331/ The role of institutional environment in financing decisions of small and medium firms in developing and transition economies Han, Yong Wah Financing for SMEs is one of the biggest constraint in their growth, the extent of which differs across countries. As per the various research done, SMEs’ financing is influenced by firm specific and country specific factors. This study attempts to presents a critical review of literature on multiple themes pertaining to the role of institutional environment in financing decisions of small and medium firms, and formulates the hypotheses which identify and tests the significance of the country and firm variables in influencing the financing decision of SMEs in developing and transition economies by using the World Bank’s Enterprise Survey database which covers 133,090 firms from 123 developing countries. The OLS regression is used to identify the impact of firm-specific and country specific factors on the proportion of investment financed by bank loan. The results show that size and the age of the SMEs have a significant and positive impact on the proportion of investment financed by bank loan. We also study the impact of foreign ownership of SMEs on the proportion of investment financed by bank loan and find that domestic owned SMEs use more bank financing than foreign owned SMEs. From the country specific factors perspective, we observed that the SMEs in countries with better legal environment, lower corruption and higher availability of credit use more bank financing. Our results support both the pecking order and trade off theories. 2018-02-24 Dissertation (University of Nottingham only) NonPeerReviewed application/pdf en https://eprints.nottingham.ac.uk/54331/1/54331-Han%20Yong%20Wah.pdf Han, Yong Wah (2018) The role of institutional environment in financing decisions of small and medium firms in developing and transition economies. [Dissertation (University of Nottingham only)] |
| spellingShingle | Han, Yong Wah The role of institutional environment in financing decisions of small and medium firms in developing and transition economies |
| title | The role of institutional environment in financing decisions of small and medium firms in developing and transition economies |
| title_full | The role of institutional environment in financing decisions of small and medium firms in developing and transition economies |
| title_fullStr | The role of institutional environment in financing decisions of small and medium firms in developing and transition economies |
| title_full_unstemmed | The role of institutional environment in financing decisions of small and medium firms in developing and transition economies |
| title_short | The role of institutional environment in financing decisions of small and medium firms in developing and transition economies |
| title_sort | role of institutional environment in financing decisions of small and medium firms in developing and transition economies |
| url | https://eprints.nottingham.ac.uk/54331/ |