Determinants of Financing Pattern and Access to Formal -Informal Credit: The Case of Small and Medium Sized Enterprises in Viet Nam

Nhung Nguyen, Nhung Thi Hong Luu


We investigate factors from firm side that determine their financing pattern for new investment projects and their decision to choose formal, informal credit, or both. For financing pattern of new investment project, we use Random-effect model while Unordered-Multinomial Logistic is used to estimate probability of choosing any of four choices to access to finance, say, formal credit, informal credit, both of them, or none of them. Our analysis is based on a panel of around 2200 small and medium sized enterprises with 7900 observations extracted from the “Survey of small and medium scale manufacturing enterprises in Viet Nam” in 2005, 2007, and 2009.

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