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How credit constraints affect small and medium enterprises' strategic employment decisions and employees' labour outcomes: Evidence from Vietnam1

Journal Article


Abstract


  • This study makes use of rich firm-level and linked firm-employee datasets that span the 2009–2015 period in Vietnam to examine how SMEs' credit constraints affect their strategic employment decisions and employees' labour outcomes. Our results show that constrained SMEs enlarge total employment by employing relatively more temporary workers and paying their employees relatively lower wages than unconstrained borrowing firms. Meanwhile, discouraged firms, mostly informal businesses, do not behave differently from unconstrained counterparts. In order to maintain a stable employment portfolio, discouraged firms are relatively more willing to reward their employees with an overtime payment.

Publication Date


  • 2021

Citation


  • Bach, T., Harvie, C., & Le, T. (2021). How credit constraints affect small and medium enterprises' strategic employment decisions and employees' labour outcomes: Evidence from Vietnam1. Economics of Transition and Institutional Change, 29(2), 319-341. doi:10.1111/ecot.12280

Scopus Eid


  • 2-s2.0-85100719304

Start Page


  • 319

End Page


  • 341

Volume


  • 29

Issue


  • 2

Abstract


  • This study makes use of rich firm-level and linked firm-employee datasets that span the 2009–2015 period in Vietnam to examine how SMEs' credit constraints affect their strategic employment decisions and employees' labour outcomes. Our results show that constrained SMEs enlarge total employment by employing relatively more temporary workers and paying their employees relatively lower wages than unconstrained borrowing firms. Meanwhile, discouraged firms, mostly informal businesses, do not behave differently from unconstrained counterparts. In order to maintain a stable employment portfolio, discouraged firms are relatively more willing to reward their employees with an overtime payment.

Publication Date


  • 2021

Citation


  • Bach, T., Harvie, C., & Le, T. (2021). How credit constraints affect small and medium enterprises' strategic employment decisions and employees' labour outcomes: Evidence from Vietnam1. Economics of Transition and Institutional Change, 29(2), 319-341. doi:10.1111/ecot.12280

Scopus Eid


  • 2-s2.0-85100719304

Start Page


  • 319

End Page


  • 341

Volume


  • 29

Issue


  • 2