The role of state ownership is still a controversial topic in Vietnam’s reform process. As noted above, the Vietnamese financial system where SOCBs dominate and provide the bulk of loans in the economy (ADB 2002). So (1999) also pointed out that most SOCB credits are channeled to SOEs. It can be validly argued that state-owned SMEs have their own advantages over private SMEs in accessing credit from SOCBs. The plausible explanation for this argument is that state-owned SMEs have long-lasting ties with commercial banks from the pre-reform ear. Because they are state-owned, SOCBs’ policies favour the state business sector, as compared to the private business sector, notably in terms of interest rates, banking procedures, and collateral requirements. Therefore, it could be expected that state-owned SMEs have more opportunities to access bank loans. Based on this argument, we hypothesize that:
H:6 State-owned SMEs will employ more debt than private SMEs.