Financial constraints, financing choice and investment behavior in Asian frontier markets: Case study in Vietnam
Published: July 22, 2026
Abstract
In this study, the Panel Smooth Transition Regression (PSTR) model is used to analyze 1,072 listed non-financial and non-public companies in five Asian frontier markets (including 485 companies in Vietnam) according to the market classification of Dow Jones Industrial Average in the period 2007–2015. The study finds out that some firms in Vietnam face financial constraints. However, if a firm in Vietnam suffers from financial constraints, the extent of this situation will be less severe than the average level of firms operating in the other studied Asian frontier markets. In addition, similar to companies in the frontier markets, the source of financing for investment decisions of Vietnamese firms also includes two components: internal cash flow and long-term debt. Owning more attractive investment opportunities increases the position of Vietnamese firms in the capital market, giving them more favorable access to and therefore a larger share of long-term debt to finance investment decisions.
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