Bank ties, institutional pressures, and capital structure of Vietnamese SMEs

Abstract

PurposeThis article studies the moderating effect of institutional pressures on the impact of bank ties on the capital structure of small and medium-size enterprises (SMEs).Design/methodology/approachThe study uses an unbalanced longitudinal dataset covering three years—2011, 2013 and 2015—from a project on small manufacturing enterprises in Vietnam. The sample consists of 7,680 firm-year observations.FindingsPressures from formal and informal institutions lessen the positive effect of bank ties on the capital structure of SMEs. These moderating effects are more salient in regions having lower institutional quality.Originality/valueEmpirically showing how institutional factors can be investigated together with relational factors to explain the capital structure of SMEs in a developing economy. Distinguishing between formal and informal institutional pressures and revealing their indirect effect on SMEs' capital structure through impacting the effect of bank ties.

The effect of breadth of external pressure on leaders in small and medium-sized enterprises: does the firm become more entrepreneurial?

“…This is important to understand as EO has a fundamental bearing on SME competitiveness and long-term performance (Shah and Ahmad, 2019). The focus on external pressure is also gaining interest in the SME and entrepreneurship literature (Muhammad Auwal et al, 2020;Ngo et al, 2022;Ojediran et al, 2022;Wang et al, 2017). Our research question is: RQ1.…”