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| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Preparing fertile ground: how does the quality of business environments affect MSE growth? |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Small Business Economics |
| Publisher | Springer |
| Geographical Reach | international |
| ISSN | 0921-898X |
| Page Range | online |
| Date | 2023 |
| Abstract Text | We study how the quality of local business environments helps explain growth outcomes of micro- and small enterprise microfinance clients by drawing on long-term nationwide administrative data and a policy shock in Cambodia. The staggered launch of special economic zones, which we link to positive shocks to the business environment on both the demand and supply side, leads to significantly increased employment in micro- and small enterprises (MSEs) located in these special economic zones (SEZs), compared to enterprises in contextually similar districts that are unexposed to an SEZ. Key channels explaining the improved growth outcomes include expanded access to external markets for the enterprises’ goods and services, more dynamic labor environments, and improved credit terms and conditions. To broaden the relevance of our findings, we combine data from prominent empirical studies on microfinance and demonstrate how related business conditions identified in the enterprise growth literature help explain differences in client business outcomes found in their results. Policy implications are that a smaller but influential segment of microfinance borrowers significantly benefit from opportunities provided by improved local business environments and that governments and lenders can play active roles in facilitating the necessary improvements for such MSEs. |
| Free access at | DOI |
| Related URLs | |
| Digital Object Identifier | 10.1007/s11187-023-00804-z |
| Other Identification Number | merlin-id:23980 |
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| Funders | Open access funding provided by University of Zurich. This work was supported by the Swiss National Science Foundation (Grant # 100011–150304) and the University of Zurich Stiftung fur wissenschaftliche Forschung (Grant #F-61811–04-01). |
| Keywords | Enterprise growth; Microfinance; Business environments; Policy shock |
| Additional Information | Bereits als Working Paper in SSRN No. 3532466 erschienen: https://doi.org/10.2139/ssrn.3532466. |