Abstract:
In Vietnam, SMEs account for up to 98% of the total number of enterprises. They contribute about
48% to the country’s GDP, 20% to export value and provide jobs for 77% of the country’s labor force.
However, majority of the SMEs are micro enterprises with very limited access to resources such as
advanced technology and formal credit, etc. Despite their significant contributions to social and
economic development, SMEs are often regarded as “the missing middle” they are usually not the
subject of interest for commercial banks while their loans might be too large to borrow from
microfinance institutions. This study surveys SMEs credit accessibility, identify the factors that affect
their credit access, and the interest rate charged on their loan in Vietnam. Primary data are obtained
from a survey of 487 SMEs in Hanoi in June 2013. Logistic regression is used to determine SMEs’
ability to access to credit and ordinary least square to estimate the interest rate charged on the
SMEs largest loan. The results show owner characteristics, educational level and gender are the
most important factors in determining the access to credit, followed by SMEs relationship with
banks and customers. With regards to the loan interest rate, the owner characteristics variables are
non-significant. The most expensive source of financing is from private money lender, followed by
commercial bank loan and microfinance.
JEL classification: G320, D920
