Investment and financing behaviours in the financial crisis : the sustainable implications for SMEs

Despite the driving role of economic growth, SMEs in Vietnam have dealt with many critical constraints relating to insufficiency of internal financing sources and inaccessibility of external funds arising from the crisis period. Based on the unique dataset of Vietnam's SMEs covering the period of 2008-2016, this research aims to investigate the role of the financial crisis on financing and investment behaviours of SMEs, which remains scarce in the existing studies. The results find that there is a reduction in SMEs' investment caused by the crisis period. In addition, following the onset of the economic crisis, the internally generated finance is more influential on SMEs' investment than the supply of bank finance, supporting the pecking order theory to explain the nexus between investment and financing behaviours, similar to the behaviours of large-sized firms or listed firms. Some policy implications are provided to better conduct business practices for the sustainability of SMEs.