Effect of location on access to finance: international evidence on the moderating role of employee training

Abstract

Purpose

The paper answers the following questions: (1) Do firms located in rural areas experience greater problems in accessing financial services? (2) If this is the case, what can these firms do to improve their access to finance?

Design/methodology/approach

This paper uses the pooled logistic regression and the data collected by the World Bank's Enterprise Surveys during the period between 2008 and 2018 to answer the aforementioned questions.

Findings

The results of this paper show that firms headquartered in rural (urban) areas experience greater (lower) problems in accessing finance than other firms. This paper attributes these findings to higher (lower) levels of information asymmetry and lower (higher) levels of density of banking operations in rural (urban) areas. The results of this paper also show that firms headquartered in rural areas can improve their access to finance by increasing the skill levels of their employees.

Originality/value

This paper highlights the actions that rural firms can undertake to overcome the adverse impact of their geographic location.

Citation

Bakhadirov, M., Pashayev, Z. and Farooq, O. (2022), "Effect of location on access to finance: international evidence on the moderating role of employee training", Review of Behavioral Finance, Vol. 14 No. 2, pp. 260-276. https://doi.org/10.1108/RBF-07-2020-0166