![[PDF]](/pb-assets/Icons/adobe-pdf-icon-1498649896243.png){kind=icon}
Abstract
Small- and medium-sized enterprises (SMEs) in the service and hospitality industries are critical for economic development in Latin America. However, due to information asymmetries, access to capital is a major obstacle for SMEs to expand their activities. Drawing from agency theory, the purpose of this study was to examine the financial constraints of SMEs in the service sector, particularly the case of hospitality firms in Latin America, due to requirements associated with mitigating information asymmetries. Using a logit model, we investigated whether financial requirements acting as mechanisms to mitigate information asymmetries, such as fixed asset collateral requirements and financial statement audits, would be associated with credit constraints for small- and medium-sized firms. We further investigated whether, due to their unique financing characteristics, SMEs in the hospitality industry would be less credit constrained than other industries in the service sector. Results suggest that SMEs subjected to collateralized fixed assets and auditing requirements, separately, were more likely to be credit constrained. However, our findings indicate that both financial requirements, when used together, decreased the likelihood of credit constraint for SMEs in the hospitality industry.
Keywords
References
|
Arráiz, I, Meléndez, M, Stucchi, R (2014) Partial credit guarantees and firm performance: Evidence from Colombia. Small Business Economics 43: 711–724. Google Scholar | Crossref | |
|
Aterido, R, Hallward-Driemeier, M (2011) Whose business is it anyway? Closing the gender gap in entrepreneurship in Sub-Saharan Africa. Small Business Economics 37: 443–464. Google Scholar | Crossref | |
|
Aterido, R, Hallward-Driemeier, M, Pagés, C (2011) Big constraints to small firms’ growth? Business environment and employment growth across firms. Economic Development and Cultural Change 59(August): 609–647. Google Scholar | Crossref | |
|
Avery, RB, Bostic, RW, Samolyk, KA (1998) The role of personal wealth in small business finance. Journal of Banking & Finance 22(6–8): 1019–1061. Google Scholar | Crossref | |
|
Ayyagari, M, Beck, T, Demirguc-Kunt, A (2007) Small and medium enterprises across the globe. Small Business Economics 29(4): 415–434. Google Scholar | Crossref | ISI | |
|
Ayyagari, M, Demirguc-Kunt, A, Maksimovic, V (2008) How important are financing constraints? The role of finance in the business environment. The World Bank Economic Review 22(3): 483–516. Google Scholar | Crossref | |
|
Ayyagari, M, Demirguc-Kunt, A, Maksimovic, V (2014) Who creates jobs in developing countries? Small Business Economics 43(1): 75–99. Google Scholar | Crossref | |
|
Becchetti, L, Trovato, G (2002) The determinants of growth for small and medium sized firms. The role of the availability of external finance. Small Business Economics 19(4): 291–306. Google Scholar | Crossref | |
|
Beck, T, Demirgüç-Kunt, A, Maksimovic, V (2005) Financial and legal constraints to growth: Does firm size matter? The Journal of Finance 60(1): 137–177. Google Scholar | Crossref | ISI | |
|
Beck, T, Demirguc-Kunt, A (2006) Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking & Finance 30(11): 2931–2943. Google Scholar | Crossref | ISI | |
|
Beck, T, Demirgüç-Kunt, A, Levine, R (2007) Finance, inequality and the poor. Journal of Economic Growth 12(March): 27–49. Google Scholar | Crossref | |
|
Beck, T, Demirgüç-Kunt, A, Singer, D (2013) Is small beautiful? Financial structure, size and access to finance. World Development 52: 19–33. Google Scholar | Crossref | |
|
Beck, T, Demirguc-Kunt, A, Maksimovic, V (2008) Financing patterns around the world: Are small firms different? Journal of Financial Economics 89(3): 467–487. Google Scholar | Crossref | ISI | |
|
Becker, CL, Defond, ML, Jiambalvo, J. (1998) The effect of audit quality on earnings management. Contemporary Accounting Research 15(1): 1–24. Google Scholar | Crossref | |
|
Berger, AN, Espinosa-Vega, MA, Frame, WS. (2011) Why do borrowers pledge collateral? New empirical evidence on the role of asymmetric information. Journal of Financial Intermediation 20(1): 55–70. Google Scholar | Crossref | |
|
Berger, AN, Klapper, LF, Martinez Peria, MS. (2008) Bank ownership type and banking relationships. Journal of Financial Intermediation 17(1): 37–62. Google Scholar | Crossref | ISI | |
|
Berger, AN, Klapper, LF, Udell, GF (2001) The ability of banks to lend to informationally opaque small businesses. Journal of Banking and Finance 25(12): 2127–2167. Google Scholar | Crossref | ISI | |
|
Berger, AN, Udell, GF (1995) Relationship lending and lines of credit in small firm finance. The Journal of Business 68(3): 351–381. Google Scholar | Crossref | |
|
Berger, AN, Udell, GF (2006) A more complete conceptual framework for SME finance. Journal of Banking & Finance 30(11): 2945–2966. Google Scholar | Crossref | ISI | |
|
Berger, A, Rice, T (2010) Do small businesses still prefer community banks? Vasa. Available at: http://medcontent.metapress.com/index/A65RM03P4874243N.pdf Google Scholar | |
|
Berger, A, Udell, G (1998) The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle. Journal of Banking & Finance 22(6–8): 613–673. Google Scholar | Crossref | ISI | |
|
Berry, A (2002) The role of the small and medium enterprise sector in Latin America and similar developing economies. Seton Hall Journal of Diplomacy and International Relations 3(Winter/Spring): 104–119. Google Scholar | |
|
Bertrand, M, Mullainathan, S (2001) Do people mean what they say? American Economic Review 91(May): 67–72. Google Scholar | Crossref | |
|
Bester, H (1987) The role of collateral in credit markets with imperfect information. European Economic Review 31(4): 887–899. Google Scholar | Crossref | |
|
Blanchflower, DG, Levine, PB, Zimmerman, DJ (2003) Discrimination in the small-business credit market. The Review of Economics and Statistics 85(4): 930–943. Google Scholar | Crossref | ISI | |
|
Brown, M, Jappelli, T, Pagano, M (2009) Information sharing and credit: Firm-level evidence from transition countries. Journal of Financial Intermediation 18(2): 151–172. Google Scholar | Crossref | |
|
Carlin, WJ, Schaffer, ME, Seabright, P (2006) Where are the real bottlenecks? A Lagrangian approach to identifying constraints on growth from subjective survey data. Available at: http://eprints.ucl.ac.uk/16118/ Google Scholar | |
|
Carpenter, R, Petersen, B (2002) Is the growth of small firms constrained by internal finance? Review of Economics and Statistics 84(2): 298–309. Google Scholar | Crossref | ISI | |
|
Chavis, LW, Klapper, LF, Love, I (2011) The impact of the business environment on young firm financing. World Bank Economic Review 25: 486–507. Google Scholar | Crossref | |
|
Claessens, S, Laeven, L (2003) Financial development, property rights, and growth. The Journal of Finance 58(6): 2401–2436. Google Scholar | Crossref | |
|
Claessens, S, Tzioumis, K (2006) Measuring firms’ access to finance. World Bank 1–25. Google Scholar | |
|
Clarke, G, Cull, R, Peria, M.(2005) Bank lending to small businesses in Latin America: Does bank origin matter?…of Money, Credit and Banking 37(1): 83–118. Google Scholar | Crossref | |
|
Dalbor, MC, Upneja, A (2004) The investment opportunity set and the long-term debt decision of U.S. lodging firms. Journal of Hospitality & Tourism Research 28(3): 346–355. Google Scholar | SAGE Journals | |
|
Demombynes, G, Özler, B (2005) Crime and local inequality in South Africa. Journal of Development Economics 76: 265–292. Google Scholar | Crossref | ISI | |
|
Devesa, MJS, Esteban, LP (2011) Spanish hotel industry: indebtedness determinants. Applied Economics 43(28): 4227–4238. Google Scholar | Crossref | |
|
Diamond, DW (1984) Financial intermedation and delegated monitoring. Review of Economic Studies 51(3): 393–414. Google Scholar | Crossref | |
|
Djankov, S, Ramalho, R (2009) Employment laws in developing countries. Journal of Comparative Economics 37(1): 3–13. Google Scholar | Crossref | ISI | |
|
Elgonemy, A (2002) Debt-financing alternatives—refinancing and restructuring in the lodging industry. The Cornell Hotel and Restaurant Administration Quarterly 43(3): 7–21. Google Scholar | SAGE Journals | |
|
Ernst and Young (2015) Global Hospitality Insights: Top Thoughts for 2016. Global hospitality Insights. Available at: http://www.ey.com/Publication/vwLUAssets/Top_thoughts_for_2013/$FILE/Top_thoughts_for_2013.pdf Google Scholar | |
|
Farčvnik, D, Kuščer, K, Trobec, D (2015) Indebtedness of the tourism sector in mediterranean countries. Tourism Economics 21(1): 141–157. Google Scholar | SAGE Journals | |
|
Frazer, G (2005) Which firms die? A look at manufacturing firm exit in Ghana. Economic Development and Cultural Change 53(3): 585–617. Google Scholar | Crossref | ISI | |
|
Harris, M, Raviv, A (1991) The theory of capital structure. The Journal of Finance 46(1): 297–355. Google Scholar | Crossref | ISI | |
|
Hollenstein, H (2005) Determinants of international activities: Are SMEs different? Small Business Economics 24(5): 431–450. Google Scholar | Crossref | ISI | |
|
Hosmer, DW, Lemeshow, S (2013) Applied Logistic Regression. Hoboken: John Wiley & Sons, Inc. Google Scholar | Crossref | |
|
IDB (2015) Air Transport Sector in Latin America. Washington, DC: IDB. Google Scholar | |
|
IFC (2016) A Hotel Is Not Just A Place To Sleep: Promoting Jobs, Business Infrastructure, Tax Revenues, and Local Supply Chains. Washington, DC: The World Bank Group. Google Scholar | |
|
ILO (2013) Labour Overview: Latin America and the Caribbean. Geneva: ILO. Google Scholar | |
|
Islam, A, Amin, M (2015) Women managers and the gender-based gap in access to education: Evidence from firm-level data in developing countries. Feminist Economics 22(3): 127–153. Google Scholar | Crossref | |
|
Jang, S (Shawn), Kim, J (2009) Revisiting the financing behavior of restaurant firms: The firm-size perspective. International Journal of Hospitality Management 28(1): 177–179. Google Scholar | Crossref | |
|
Jang, SC, Ryu, K (2006) Cross-balance sheet interdependencies of restaurant firms: A canonical correlation analysis. International Journal of Hospitality Management 25(1): 159–166. Google Scholar | Crossref | |
|
Jang, S, Tang, CH, Chen, MH (2008) Financing behaviors of hotel companies. International Journal of Hospitality Management 27(3): 478–487. Google Scholar | Crossref | |
|
Jensen, M, Meckling, W (1976) Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3: 305–360. Google Scholar | Crossref | ISI | |
|
Jiménez, G, Salas, V, Saurina, J (2006) Determinants of collateral. Journal of Financial Economics 81(2): 255–281. Google Scholar | Crossref | |
|
Kaplan, D (2009) Job creation and labor reform in Latin America. Journal of Comparative Economics 37(1): 91–105. Google Scholar | Crossref | |
|
Kaufmann, D, Kraay, A, Mastruzzi, M (2011) The worldwide governance indicators: Methodology and analytical issues. Hague Journal on the Rule of Law 3(2): 220–246. Google Scholar | Crossref | ISI | |
|
Kim, WG (1997) The determinants of capital structure choice in the US restaurant industry. Tourism Economics 3(4): 329–340. Google Scholar | SAGE Journals | |
|
Kuntchev, V, Ramalho, R (2013) What have we learned from the enterprise surveys regarding access to credit by SMEs? (May): 1–35. Google Scholar | |
|
Lee, S, Dalbor, MC (2013) Short-term debt and firm performance in the US restaurant industry: The moderating role of economic conditions. Tourism Economics 19(3): 565–581. Google Scholar | SAGE Journals | |
|
Love, I (2003) Financial development and financing constraints: International evidence from the structural investment model. Review of Financial Studies 16(3): 765–791. Google Scholar | Crossref | |
|
Maloney, WF (2004) Informality revisited. World Development 32(7): 1159–1178. Google Scholar | Crossref | ISI | |
|
Menkhoff, L, Neuberger, D, Rungruxsirivorn, O (2012) Collateral and its substitutes in emerging markets’ lending. Journal of Banking and Finance 36(3): 817–834. Google Scholar | Crossref | |
|
Myers, S (1977) Determinants of corporate borrowing. Journal of Financial Economics 5: 147–175. Google Scholar | Crossref | ISI | |
|
Newell, G, Seabrook, R (2006) Factors influencing hotel investment decision making. Journal of Property Investment & Finance 24(4): 279–294. Google Scholar | Crossref | |
|
Nguyen, TDK, Ramachandran, N (2006) Capital structure in small and medium-sized enterprises: The case of vietnam. Asean Economic Bulletin 23(2): 192–211. Google Scholar | Crossref | |
|
Nichter, S, Goldmark, L (2009) Small firm growth in developing countries. World Development 37(9): 1453–1464. Google Scholar | Crossref | ISI | |
|
Pacheco, L, Tavares, F (2017) Capital structure determinants of hospitality sector SMEs. Tourism Economics 23(1): 113–132. Google Scholar | SAGE Journals | |
|
Peltoniemi, J, Vieru, M (2013) Personal guarantees, loan pricing, and lending structure in finnish small business loans. Journal of Small Business Management 51(2): 235–255. Google Scholar | Crossref | |
|
Perez-Batres, LA, Pisani, MJ, Doh, JP (2012) An assessment of the role of latin america in the core international business literature (2001–2010) Latin American Business Review 13(4): 263–287. Google Scholar | Crossref | |
|
Pisani, MJ, Yoskowitz, DW (2012) A study of small neighborhood tienditas in Central America. Latin American Research Review 47(S): 116–138. Google Scholar | Crossref | |
|
Psillaki, M, Eleftheriou, K (2015) Trade credit, bank credit, and flight to quality: Evidence from French SMEs. Journal of Small Business Management 53(4): 1219–1240. Google Scholar | Crossref | |
|
Rajan, RG, Zingales, L (1998) Financial dependence and growth. American Economic Review 88(3): 559–586. Google Scholar | ISI | |
|
Rand, J (2007) Credit constraints and determinants of the cost of capital in vietnamese manufacturing. Small Business Economics 29(1–2): 1–13. Google Scholar | Crossref | |
|
Riding, A, Madill, J, Haines, G (2007) Incrementality of SME loan guarantees. Small Business Economics 29(1–2): 47–61. Google Scholar | Crossref | ISI | |
|
Rocha, GC (2010) Ensaios sobre a demanda do transporte aéreo regional. Journal of Transport Literature 4(1): 114–133. Google Scholar | |
|
Sacerdoti, E (2005) Access to bank credit in Sub-Saharan Africa: Key issues and reform strategies. IMF Working Paper, 05/166. Google Scholar | |
|
Serrasqueiro, Z, Nunes, PM (2014) Financing behaviour of portuguese SMEs in hotel industry. International Journal of Hospitality Management 43: 98–107. Google Scholar | Crossref | |
|
Sharma, A (2007) Small hotel financing in Sub-Saharan Africa: Evidence from Tanzania. The Journal of Hospitality Financial Management 15(2): 25–38. Google Scholar | Crossref | |
|
Sharma, A, Upneja, A (2005) Factors influencing financial performance of small hotels in Tanzania. International Journal of Contemporary Hospitality Management 17(6): 504–515. Google Scholar | Crossref | |
|
Sikka, P (2009) Financial crisis and the silence of the auditors. Accounting, Organizations and Society 34(6–7): 868–873. Google Scholar | Crossref | ISI | |
|
Soares, RR (2004) Development, crime and punishment: Accounting for the international differences in crime rates. Journal of Development Economics 73(1): 155–184. Google Scholar | Crossref | ISI | |
|
Söderbom, M, Teal, F (2001) Firm Size and Human Capital as Determinants of Productivity and Earnings (WPS 2001 No. 9) Available at: http://core.kmi.open.ac.uk/download/pdf/6280477.pdf Google Scholar | |
|
Steijvers, T, Voordeckers, W, Vanhoof, K (2010) Collateral, relationship lending and family firms. Small Business Economics 34(3): 243–259. Google Scholar | Crossref | |
|
Stiglitz, JE, Weiss, A (1981) Credit rationing in markets with rationing credit information imperfect. The American Economic Review 71(3): 393–410. Google Scholar | |
|
Such, MJ, Zapata-Aguirre, S, Risso, WA. (2009) Turismo y crecimiento económico: Un análisis empírico de Colombia. Estudios Y Perspectivas En Turismo 18: 21–35. Google Scholar | |
|
Tang, CH, Jang, SS (2007) Revisit to the determinants of capital structure: A comparison between lodging firms and software firms. International Journal of Hospitality Management 26(1): 175–187. Google Scholar | Crossref | |
|
Tsai, H, Pan, S, Lee, J (2011) Recent research in hospitality financial management. International Journal of Contemporary Hospitality Management 23(7): 941–971. Google Scholar | Crossref | |
|
Uchida, H, Udell, GF, Yamori, N (2012) Loan officers and relationship lending to SMEs. Journal of Financial Intermediation 21(1): 97–122. Google Scholar | Crossref | |
|
Valdes, V (2015) Determinants of air travel demand in middle income countries. Journal of Air Transport Management 42: 75–84. Google Scholar | Crossref | |
|
Wald, JK (1999) How firm characteristics affect capital structure: An international comparison. Journal of Financial Research 12(2): 161–187. Google Scholar | Crossref | |
|
Wooldridge, JM (2002) Econometric Analysis of Cross Section and Panel Data. (Cambridge, M. , Ed.) booksgooglecom (Vol. 58). MIT Press. Available at: http://doi.org/10.1515/humr.2003.021 Google Scholar | |
|
World Bank (2001) World Bank Group Review of Small Business Activities. Washington: World Bank. Google Scholar | |
|
World Bank (2015) World Development Indicators. Washington: World Bank. Available at: http://elibrary.worldbank.org/content/book/9780821388457 Google Scholar | |
|
Zettelmeyer, J (2006) Growth and reforms in latin america: A survey of facts and arguments (No. WP/06/210). IMF Working Paper. Google Scholar |
