Small and medium enterprises' credit access, ownership structure and job development

Abstract

This study investigates the effects of credit access on the job development of small and medium enterprises (SMEs) across 15 developing Asian countries over the period from 2007 to 2016. We also examine how ownership structure affects the linkage between credit access and job development. We find evidence that increased access to finance tends to improve the job development of SMEs. In addition, the results suggest that an increase in the domestic private and foreign ownership of SMEs improves the positive impacts of access to finance on employment growth, whereas government ownership does not impact firms' job development. The results are robust to using the system generalised method of moments (GMM) as the estimation technique to alleviate concerns about dynamic panel bias and endogeneity. Our findings highlight the impacts of firm financing and ownership on job growth and are relevant to policymakers who are considering additional regulations to enhance employment in developing countries.