Effect of location on access to finance: international evidence on the moderating role of employee training

Abstract

PurposeThe paper answers the following questions: (1) Do firms located in rural areas experience greater problems in accessing financial services? (2) If this is the case, what can these firms do to improve their access to finance?Design/methodology/approachThis paper uses the pooled logistic regression and the data collected by the World Bank's Enterprise Surveys during the period between 2008 and 2018 to answer the aforementioned questions.FindingsThe results of this paper show that firms headquartered in rural (urban) areas experience greater (lower) problems in accessing finance than other firms. This paper attributes these findings to higher (lower) levels of information asymmetry and lower (higher) levels of density of banking operations in rural (urban) areas. The results of this paper also show that firms headquartered in rural areas can improve their access to finance by increasing the skill levels of their employees.Originality/valueThis paper highlights the actions that rural firms can undertake to overcome the adverse impact of their geographic location.

Mediating Role of Utilization of Financial Products and Services on the Relationship between Financial Access and MSMEs Growth in India

“…According to our research, which obtained the same result as that of Wasiuzzaman et al (2020), concluded that the use of financial goods and services was good for the development of micro-enterprises. Additionally, financial access encourages MSMEs to expand because it alleviates unexpected economic shocks and market fluctuations in their operations (Bakhadirov et al, 2020). This study is also consistent with studies by García-Santillán et al ( 2017), who showed that increased access to capital benefitted micro-and small-medium enterprises (MSMEs) by enabling them to discover and engage in lucrative business possibilities.…”

“…Additionally, most financial access research has been done in developed nations. Only a few studies focus on the financial access of the emerging-market MSME sectors (Bakhadirov et al, 2020). Additionally, the influence of financial resources on MSMEs' growth can be investigated by investigating the different mechanisms at play (Muliadi et al, 2020;Patel & Shah, 2021;Yadav & Suthar, 2021).…”

“…People may use the term while discussing the junction of the supply and demand curve for financial services (Nunoo & Andoh, 2012). It refers to issues on the supply side related to information asymmetry (Bakhadirov et al, 2020;Infelise, 2014). Since the real use of services is a required part of an action (Madanchian et al, 2015;Ye & Kulathunga, 2019;Zhao et al, 2010), without taking certain financial services into consideration, knowledge and access to it do not affect microenterprises.…”

“…Somewhat for expanding and getting more sophisticated, the MSME sectors of emerging countries have stayed static. Economic instability, unpredictable currency charge, more significant operation costs, supporting upheaval and high inequality are some features of a developing financial system that further risk MSMEs' development (Bakhadirov et al, 2020;Talledo et al, 2015).…”

Assessing the Impact of Financial Literacy on Firm Sustainability: Mediating Role of Financial Access and Firm Growth

“…This result is in line with the RBV theory's reasoning (Lee et al, 2015). Finance is substantially positively associated with small company development, according to the overwhelming majority of prior research (Bakhadirov et al, 2020), in various settings. Small companies benefit from access to financing because it allows them to join the market, expand, minimize risk, foster innovation and seize possibilities for future development.…”