Access to Finance and Small Enterprise Growth: Evidence from East Java

Type Journal Article - The Journal of Developing Areas
Title Access to Finance and Small Enterprise Growth: Evidence from East Java
Author(s)
Volume 43
Issue 2
Publication (Day/Month/Year) 2010
Page numbers 159-172
URL http://econ.unt.edu/~mcpherson/Papers/JDA.2010.pdf
Abstract
The widespread acknowledgement of the centrality of micro and small businesses in the development process has led to a proliferation of projects and programs designed to assist and promote these businesses. This research examines the common assumption that access to credit from formal financial institutions is an important determinant of growth at the firm level. Our data are from a recent survey of 858 small businesses in East Java. We employ a full information maximum likelihood approach known as discrete factor method. The results indicate that access to credit is not a significant determinant of small firm growth; instead, other observable and unobservable characteristics of firms appear to cause growth.

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