• Do Nguyen Thi My Dung Ho Chi Minh City Industry and Trade College
  • Chau Thi Thu Ngan Ho Chi Minh City Industry and Trade College




SME, bank loan application, Vietnam


This study investigates the determinants influencing the decision of Small and Medium Enterprises (SMEs) to apply for bank loans. Drawing upon a theoretical framework encompassing human capital, firm attributes, business strategy, and information asymmetry, we develop a model to predict SMEs' propensity to seek bank financing. Employing a quantitative methodology in Vietnam, we utilize a hypothetical-deductive testing approach on primary data collected through questionnaires focusing on loan applications. Our findings reveal several significant factors influencing SMEs' inclination towards bank loans. Contrary to expectations, the business experience of a firm's owner exhibits no significant correlation with the likelihood of applying for a bank loan. However, variables such as the educational background of the firm's owner, firm size, collateral availability, and interest rates on loans exhibit negative associations with loan application propensity. Conversely, factors including the presence of comprehensive business plans and establishment of relationships with bankers during start-up phases demonstrate positive relationships with SMEs' inclination to apply for bank loans. This study contributes to the understanding of SMEs' financing decisions and provides valuable insights for financial institutions in designing tailored lending strategies to meet the diverse needs of SMEs.


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Author Biographies

Do Nguyen Thi My Dung, Ho Chi Minh City Industry and Trade College

Ho Chi Minh City Industry and Trade College (HITC), Ho Chi Minh City, Vietnam,

Chau Thi Thu Ngan, Ho Chi Minh City Industry and Trade College

Ho Chi Minh City Industry and Trade College (HITC), Ho Chi Minh City, Vietnam


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How to Cite

Do Nguyen Thi My Dung, & Chau Thi Thu Ngan. (2024). FACTORS INFLUENCING SMALL AND MEDIUM ENTERPRISES’ DECISION TO APPLY FOR BANK LOANS: A QUANTITATIVE ANALYSIS IN VIETNAM. Economics, Finance and Management Review, (1(17), 78–88. https://doi.org/10.36690/2674-5208-2024-1-78



Chapter 2. Development of Finance, Accounting and Auditing