Capital Structure and Investment Financing of Small and Medium-Sized Enterprises in Vietnam

Huong Thi Trinh, Makoto Kakinaka, Donghun Kim, Tae Yong Jung

Research output: Contribution to journalArticlepeer-review

18 Citations (Scopus)


Insufficient sources of internal financing and inaccessibility of external financing are acknowledged as crucial constraints on new investment for small and medium-sized enterprises (SMEs). This study examines how capital structure is related to investment decision for SMEs in Vietnam. In particular, we investigate the effect of capital structure on the decision to seek new investment as well as the choice of its financing sources. The main results reveal that SMEs with high financial leverage tend to engage more in seeking new investment. Moreover, empirical results demonstrate that among SMEs seeking new investment, those with higher financial leverage are more likely to choose external financing rather than internal financing. These results confirm the dynamic feature of the pecking order theory in the context of SMEs’ capital structure in Vietnam.

Original languageEnglish
Pages (from-to)325-349
Number of pages25
JournalGlobal Economic Review
Issue number3
Publication statusPublished - 2017 Jul 3

Bibliographical note

Publisher Copyright:
© 2017 Institute of East and West Studies, Yonsei University, Seoul.

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Economics, Econometrics and Finance(all)
  • Political Science and International Relations


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