TY - JOUR
T1 - Connectedness and SME Financing in Post-communist Economies: Evidence from Uzbekistan
AU - Ruziev, Kobil
AU - Midmore, Peter
PY - 2015/6/30
Y1 - 2015/6/30
N2 - This paper investigates effects of interpersonal links with bureaucrats on SME access to formal finance. A survey of 502 SMEs in post-communist Uzbekistan shows fewer SMEs with government connections express a need for external finance, but success rates of applications are higher than for SMEs without connections. Econometric models show government-connected SMEs receive more formal credit than their counterparts. The small share of SME credit available is thus distributed in favour of those capitalising on bureaucratic links, with consequent resource misallocation. Findings imply that greater SME credit flows need supplementing with capacity building that improves bank transparency and efficiency.
AB - This paper investigates effects of interpersonal links with bureaucrats on SME access to formal finance. A survey of 502 SMEs in post-communist Uzbekistan shows fewer SMEs with government connections express a need for external finance, but success rates of applications are higher than for SMEs without connections. Econometric models show government-connected SMEs receive more formal credit than their counterparts. The small share of SME credit available is thus distributed in favour of those capitalising on bureaucratic links, with consequent resource misallocation. Findings imply that greater SME credit flows need supplementing with capacity building that improves bank transparency and efficiency.
UR - http://hdl.handle.net/2160/35784
UR - https://www.tandfonline.com/doi/suppl/10.1080/00220388.2014.989991/suppl_file/fjds_a_989991_sm8049.pdf
U2 - 10.1080/00220388.2014.989991
DO - 10.1080/00220388.2014.989991
M3 - Article
SN - 0022-0388
VL - 51
SP - 586
EP - 602
JO - Journal of Development Studies
JF - Journal of Development Studies
IS - 5
ER -