An Analysis of Networks and Bank Financing of SMEs

It is argued that networking is crucial for small and medium-sized enterprises (SMEs),particularly in emerging economies as they seek to access resources for development. One key resource in emerging economies is bank financing. In this paper, we analyse the effect of different network ties on bank financing to private SMEs. The results found that different network ties influence SMEs' use of bank loans in different ways. Specifically, networking with customers and government officials promotes the use of bank loans, while networking with suppliers and social ties reduces the need for bank loans.