Abstract

This study investigates the impact of access to finance on small and medium-sized enterprise (SME)
development in Viet Nam, specifically focusing on estimating the economic effects of an Asian
Development Bank (ADB) 2021 loan to the Vietnam International Bank (VIB). The research examined
how lessening credit constraints affects job creation and local economic development, building on
established literature that links SME financing to firm growth and production expansion. The study
looked at two dimensions, including comparing firms with and without loans (extensive margin) and the
marginal effects among borrowing firms (intensive margin). Analysis of panel enterprise surveys from
2005 to 2020 using the fixed effects model showed that formal institutional borrowing correlates with
an average increase of 1.3 jobs per firm. Projections suggest that ADB’s $260 million loan to VIB could
generate between 619 and 3,274 new jobs, with an estimated creation of 10.4 jobs per $1 million lent.
On the intensive margin, an increase in debt is associated with increased productivity and fixed assets,
indicating that loans support long-term growth strategies

Authors: Ngoc Anh Nguyen, Ha-My Bui, Gia-Tan Nguyen, Manfred Kiefer, and Christian Abeleda

Access link: https://www.adb.org/publications/access-finance-sme-development-viet-nam