Abstract
This study investigates whether the use of information technology capabilities reduces financial constraints on SMEs. Using the instrumental variable technique with a Vietnamese panel dataset, the estimates provide evidence that the utilization of technology facilitates loan applications and increases approval rates. In addition, while taking advantage of technology does not help extend loan terms, it does increase the amount of formal loans. Further analysis reveals several potential channels of transmission. First, technology use promotes e-business, and improves firm productivity. Also, although the adoption of technology does not immediately improve the transparency of the business environment, it does promote innovative activities.
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