Does connectedness improve SMEs’ access to formal finance? Evidence from post-communist economies

Ruziev, Kobil; Webber, Don

Abstract

© 2018, © 2018 Informa UK Limited, trading as Taylor & Francis Group. Evidence suggests that a disproportionately greater share of formal finance is channelled to large enterprises in emerging economies, limiting the flow of appropriately-financed small and medium enterprises (SMEs). Market and information imperfections are conventionally seen as major causes of this misallocation. However, the role of political factors in affecting the distribution of formal finance has become more widely acknowledged in recent times. Our analyses of SMEs in post-communist economies also show that measures of political connectedness improve the chances of receiving bank credit and that the benefits of these links are stronger for well-established and larger SMEs.

• Journal Article Type: Article
• Acceptance Date: Apr 18, 2018
• Online Publication Date: Jun 13, 2018
• Publication Date: Jun 13, 2018
• Deposit Date: Apr 23, 2018
• Publicly Available Date: Dec 14, 2019
• Journal: Post-Communist Economies
• Print ISSN: 1463-1377
• Electronic ISSN: 1465-3958
• Publisher: Taylor & Francis (Routledge)
• Peer Reviewed: Peer Reviewed
• Volume: 31
• Issue: 2
• Pages: 258-278
• DOI: https://doi.org/10.1080/14631377.2018.1470855
• Keywords: financial development, formal finance, SME finance, firm-level analysis, transition economies
• Public URL: https://uwe-repository.worktribe.com/output/867430
• Publisher URL: https://doi.org/10.1080/14631377.2018.1470855
• Additional Information: Additional Information : This is an Accepted Manuscript of an article published by Taylor & Francis in Post-Communist Economies on 13 June 2018, available online: https://doi.org/10.1080/14631377.2018.1470855
• Contract Date: Apr 23, 2018