Finance Research Letters 31 (2019) 270–277

Contents lists available at ScienceDirect

Finance Research Letters

journal homepage: www.elsevier.com/locate/frl

Does government support promote SME tax payments? New

T
evidence from Vietnam
Vu Van Huonga, Ly Kim Cuongb,
⁎

a
Department of Economics, Academy of Finance, Ha Noi, Vietnam
b
Banking and Finance Department, Open University, Ho Chi Minh City, Vietnam

ARTICLE INFO ABSTRACT

Keywords: This paper examines whether governments can benefit from their support for firms by increasing
Government support firms’ tax compliance. With a panel dataset built from four small and medium-sized enterprise
Small- and medium-sized enterprise surveys conducted in Vietnam (from 2009 to 2015), we use fixed-effect instrumental variable
Tax payment estimations to empirically test the effect of government support on tax payment. We find that
JEL classifications: government financial support has a positive effect on total tax payments. Our results reflect the
E61 positive effect of government support on firm profitability and innovative activities. This study
G32 helps tax authorities to develop more effective strategies for increasing taxpayer compliance.
H25
H26

1. Introduction

Small and medium enterprises (SMEs) form the core of transitional economies. SME tax non-compliance is a continuing, growing
global problem (McKerchar and Evans 2009), causing government's difficulty in raising domestic revenues from their tax bases. It is
widely known that tax evasion harms economic efficiency (Chand and Moene 1999). Hence, dealing with the problem of tax evasion
requires an understanding of attitudes towards tax compliance behaviour. This paper aims to draw attention to the factor of gov-
ernment support because social pressure from the government increases firms’ compliance and influences attitudes toward the tax
system.
Evaluating the effect of government support on total tax payments from firms faces several empirical challenges. First, unobserved
heterogeneity among firms may affect the linkage between government support and tax payments. The endogeneity of government
support is another difficulty. If studies fail to correct for the problem of unobserved heterogeneity and endogeneity, estimates will be
biased and overstated (Coleman, 2006). Furthermore, government support is not randomly allocated. Thus, seeking a reciprocal
relation between government support and total tax payments is problematic because of reverse causality. The receipt of required tax
payments lies in firms’ willingness to pay.
Consider two firms in the same location of similar size and age. One firm obtains high profits associated with high tax payments,
whereas the other firm bears losses. Assume that the firms understand certain business requirements and that government bu-
reaucrats have discretion to enforce the regulations. A rational, profit-maximizing bureaucrat would expect that the poorly per-
forming firm receiving government support could recover its business and therefore hope for higher profits. Consequently, the
bureaucrat tries to extract the highest tax revenues possible. If the expectation of high profits influences a firm's willingness to pay,
we would expect a positive (observed) relationship between government support and tax payment. This study goes beyond current

⁎
Correspondence to: Banking and Finance Department, Open University, 97 Vo Van Tan street, District 3, Ho Chi Minh City, Vietnam.
E-mail addresses: huongvu@waikato.ac.nz (V.V. Huong), cuong.lk@ou.edu.vn (L.K. Cuong).

https://doi.org/10.1016/j.frl.2018.11.017
Received 4 September 2018; Received in revised form 4 November 2018; Accepted 21 November 2018
Available online 22 November 2018
1544-6123/ © 2018 Elsevier Inc. All rights reserved.
V.V. Huong, L.K. Cuong Finance Research Letters 31 (2019) 270–277

Table 1
Descriptive statistics of variables in the model.1
Variables Definition Observation Mean SD

Total taxes in log Total taxes and fees paid by firms: 9667 2.17 1.92
Financial support 1 if firms received tax exemptions, reductions, or preferred interest loans from the government, 0 10,170 0.136 0.343
otherwise;
Technical support 1 if firms benefited from human resource training programmes, trade promotion programmes, or 10,170 0.044 0.206
quality assurance programmes from the government, 0 otherwise;
Innovation 1 1 if firms introduced new products, 0 otherwise (dummy variable); 10,169 0.077 0.268
Innovation 2 1 if firms made major improvements in existing products, 0 otherwise (dummy variable); 10,169 0.273 0.445
Innovation 3 1 if firms introduced new production processes or technology, 0 otherwise (dummy variable); 10,169 0.095 0.294
Firm size in log Total employment (number) 10,138 1.78 1.16
Firm age in log The number of years since they were established (number) 10,165 2.49 0.67
Export 1 if firm engaged in export activities, 0 otherwise (dummy variable) 10,153 0.062 0.24
Formal status of firms 1 if firms have a tax code, 0 otherwise 7973 0.67 0.46
Household ownership 1 if firm owned by a household, 0 otherwise (dummy variable) 10,170 0.643 0.479
PCI Institutional quality at provincial level 10,170 59.15 4.32

findings in the literature and for the first time considers the effects of government support on SME tax payments by using a fixed-
effect instrumental variable estimation to resolve bias in the estimated results.
Vietnam is of particular interest in this study for several reasons. In contrast with other low-income countries, Vietnam is
characterised by corrupt behaviour in the business environment. The fight against corruption began with the establishment of the
National Anti-Corruption Committee in 2006 (Rand and Tarp, 2012). Vietnamese news media have recently drawn considerable
public attention to large-scale corruption scandals in the non-state sector.2 When meeting with tax officials, 79% of Vietnamese firms
usually make “gifts” (Rand and Tarp 2012; Vu et al., 2018). As a result, the corruption “tax” can be considered very costly because it
distorts the allocation of government resources.
Secondly, since tax revenues from SMEs are a major contributor to the Vietnamese economy, low SME profits would cause a
substantial loss in government revenues. Finding an effective incentive to increase SME commitment to pay taxes remains a major
challenge in the Vietnamese institutional context. The findings from our study may suggest policy implications which can be applied
to promote tax compliance.
With a panel dataset built from surveys conducted in Vietnam (from 2009 to 2015) of four small and medium-sized enterprises,
our results show that different types of government support for firms have differing effects on total tax payments. Specifically,
whereas technical support has only an insignificant effect on government revenues, financial support has a positive influence on total
tax payments. This influence derives mainly from the positive effect of government support on firm profitability and innovative
activities, rather than on any effect on firms’ export activities and formal status.
Our paper contributes to the current literature in several ways. It is the first to investigate the social benefits of government
support in increasing government revenues from tax payments. We add to the growing literature on corruption (Rand and Tarp, 2012;
Fisman and Svensson, 2007), government subsidies (Ziqiao and Yue, 2018), and Vietnamese firm performance (Tran et al., 2009).
Secondly, our paper adds more evidence to the growing literature on tax compliance behaviour (Jimenez and Iyer, 2016; Ali et al.,
2014), showing that government support for firms promotes trust in the government when they make decisions about tax compliance.
Third, Castillo et al. (2018) find that under conditions of asymmetric information, moral hazards affect the failure of SMEs. We
contribute more to the understanding of this strand of the literature, specifically that when firms receive government support, they
develop trust in government and this in turn reduces the moral hazards faced by Vietnamese SMEs, in this way reducing the like-
lihood of their failure.
The paper is structured as follows. Section 2 provides the theoretical background of the study. Section 3 describes the data sources
and econometric models used. Section 4 presents the empirical results, while the conclusions and policy implications are given in the
Section 5.

2. Trust in government and perceptions of fairness

Examining the relationship between the provision of government financial support and firms’ fulfilment of their tax obligations is
important because the coercive element of the taxpayer-government relationship is the focus of the classical tax evasion model
(Allingham and Sandmo, 1972). On the one hand, political legitimacy theory (Kirchler et al., 2008; Tayler, 2006) proposes that tax
compliance is affected by the extent to which taxpayers trust their government. Jimenez and Iyer (2016) find that trust in government
positively influences compliance decisions. An individual's perception of the term of trade with the government determines his
decision regarding tax payment (Fjeldstad and Semboja, 2001). Government support provides firms with an additional source of
funding to run their businesses. When combined with a firm's own resources, government support can extend organisational cap-
abilities, and in turn improve firm performance. It can be argued that when firms perceive government as trustworthy, they will be

1
Only PCI is taken from the second data source, while the other variables are calculated from the first data source.
2
http://www.vir.com.vn/nguyen-kim-dodged-458-million-in-taxes-over-past-decade-60859.htmlfoo.

271
V.V. Huong, L.K. Cuong Finance Research Letters 31 (2019) 270–277

more willing to comply with tax laws. Without material reward, tax compliance becomes less assured (Fjeldstad and Semboja, 2001).
On the other hand, Torgler's (2007) theory of tax compliance posits that perceptions of fairness are an important determinant of
tax compliance. The theory starts from the rent-seeking viewpoint that government subsidies will not necessarily be distributed
effectively because the granting of subsidies is not based on a firm's promising prospects or social contribution. As a result, subsidies
actually based on social networks or political connections are not beneficial to firm performance. If taxpayers perceive that there is
unfair practice, they will rationalise tax evasion (Davis et al., 2003). Such biases in government support can increase distortions in the
efficient allocation of resources in the economy, and this may result in slow profit growth or the reduction of returns on assets
(Zhang et al., 2014). Rudolph (2009) therefore concludes that when people lose trust in government, they tend to believe that they
don't need to pay and that tax evasion is justified.
Overall, according to political legitimacy theory, government support to firms that builds trust in government will encourage tax
compliance, whereas the perception of injustice due to the unfair allocation of government subsidies is more likely to discourage
firms and their commitment to pay tax.

3. Data and methodology

3.1. Data sources

This study utilises two data sources. The first is taken from the four surveys of manufacturing SMEs in Vietnam conducted by the
Institute of Labour Science and Social Affairs (ILSSA) in collaboration with the Central Institute for Economic Management (CIEM)
and the Department of Economics, Copenhagen University, Denmark, every 2 years, in 2009, 2011, 2013 and 2015. The surveys
cover ten provinces and three regions (South, Central and North) and provide a wide range of indicators of firm characteristics,
location, industry and especially detailed information about government support activities and tax payment at firm level.
The second data source is provided by the Vietnam aggregated Provincial Competitiveness Index (PCI) surveys.3 Aimed at as-
sessing the institutional quality of provinces or local governments, these surveys were conducted by the Vietnam Competitiveness
Initiative in collaboration with the Vietnam Chamber of Commerce and Industry in the same years as the first source (2009, 2011,
2013 and 2015).
Combining the first and second sources has created a unique panel dataset (at both firm and provincial levels) that allows us to
evaluate not only the effect on firms’ tax payments of government support at firm level, but also the effects of institutional quality at
provincial level. A statistical description of the main variables in our regression is displayed in Table 1.4

3.2. Methodology

The empirical specification of the role of innovation in firm performance is kept as close as possible to the approach adopted in
previous studies (e.g., Hansen et al., 2009) as outlined below:
Yit = b0 + b1GS it + b2 Xit + b3 Z it + u1it (1)

where i indexes firms, t reflects time, b0, b1, b2, b3 are parameters to be estimated. Yit is total tax payments, while GS is government
financial or technical support. Among independent variables, Xit is a vector of firm characteristics. First, firm size and firm age are
included in the model because they represent the differences in efficiency among firms (Jovanovic, 1982) and their access to fi-
nancing resources (Farinha and Félix, 2015). Firms with greater efficiency are assumed to contribute to higher government revenues.
In addition, the formal status of firms (registered or unregistered) is considered an independent variable in the model. Based on
the theoretical model and empirical findings (McKenzie and Sakho 2010), it is found that registered firms are more likely to pay
taxes. We also control for the probability of household ownership and of firms engaged in exporting (Hansen et al., 2009). Fur-
thermore, vector Zit captures the time variation and the fact that provinces in Vietnam are relatively autonomous (Malesky, 2010).
The location of firms is considered to be one of the independent covariates in the model. Hence, this study uses the PCI index to
capture the differences in institutional quality among provinces. PCI is a weighted index of nine sub-indices, including private sector
development policies, the proactivity of provincial leadership, state sector bias, the implementation and consistency of policies,
informal charges, time costs of regulatory compliance, transparency and access to information, access to land, and business entry
costs. The PCI ranges from 1 to 100, and a higher score indicates better institutional performance.
As already noted, analysing the effect of government support on total tax payments has been challenging, due to potential
unobserved heterogeneity between firms that receive government support and those that do not. For example, firms securing gov-
ernment support may have different underlying characteristics, such as the owner's abilities and business practices, compared to
other firms that lack government support.
Furthermore, the estimation results of the effect of government support in Eq. (1) may be biased due to the endogeneity issue.
Estimating the causal effect of government support on total tax payments is a very challenging identification problem because

3
Tran et al. (2009) employ PCI as governance practices and find that PCI is statistically and economically significant in explaining differences in
firm performance across provinces. They show that a 1% improvement in governance practice increases the added value of an average firm by an
amount equal to a three-fold increase in per capita GDP.
4
Using GDP deflators, data for current variables are adjusted to 1994 prices to avoid biases that might arise because of inflation.

272
V.V. Huong, L.K. Cuong Finance Research Letters 31 (2019) 270–277

Table 2
Financial support and total tax payments.
Variables (1) (2) (3) (4) (5)
Pooled OLS FE FE IV-GMM FE IV-GMM FE IV-GMM

Financial support −0.1769⁎⁎ 0.0221 0.7730* 0.7374* 0.9822*

(0.039) (0.033) (0.366) (0.355) (0.527)
Firm size in log 1.2192⁎⁎ 0.3784⁎⁎ 0.3489⁎⁎ 0.3426⁎⁎
(0.012) (0.025) (0.035) (0.043)
Firm age in log −0.2243⁎⁎ 0.0294 0.0052 0.0222
(0.018) (0.037) (0.080) (0.096)
Export 0.2834*
(0.165)
Formal status of firms 0.2600*
(0.102)
Household ownership −0.3791⁎⁎
(0.124)
PCI 0.0179⁎⁎
(0.005)
Constant −0.1518⁎⁎ 0.8299⁎⁎
(0.057) (0.100)
Year fixed effects Yes Yes Yes Yes Yes
Observations 9640 9640 4817 4796 3139
Number of panels 3917 1817 1810 1291
Instrumental variables Location-industry-year Location-industry-year Location-industry-year
average of financial support average of financial support average of financial support
Weak identification test (Cragg–Donald 64.533 66.068 28.824
Wald F statistic)
[Stock–Yogo weak ID test critical value 16.38 16.38 16.38
at 10%]

Notes: The dependent variable is log (1 + taxes). Robust standard errors are in parentheses.
⁎
Significant at 10%.
⁎⁎
Significant at 5%.
***Significant at 1%.

government support is not randomly allocated. Consequently, it is impossible to carry out a randomized experiment. The instru-
mental variable method is the traditional way to address the endogeneity issue, but finding a convincing instrument is a thorny
question.
In this study, guided by Fisman and Svensson (2007), as an instrumental variable we select the mean value of government support
for firms in the same industry, in the same locality and in the same year. This variable is appropriate because a firm existing in a
commune with a higher level of access to government support is more likely to get such support. This so-called internal instrumental
variable is also applied in empirical studies on the effect of migration (Taylor et al., 2003; McKenzie and Rapoport, 2007).
Hoang et al. (2014) employ commune-level nonfarm networks as an instrumental variable for nonfarm participation at household
level in Vietnam. Similarly, Mont and Nguyen (2013) use the proportion of people with disability within a district in Vietnam as an
instrumental variable for the probability of an individual being disabled. Fisman and Svensson (2007) employ industry-location
averages as an instrument for firm-level bribery to overcome the bias from unobservable factors that are correlated with bribery in a
firm. In this way, our instrument may circumvent the potential problems of endogeneity in the model.
Furthermore, examining a contemporaneous relation between government support and total tax payments is problematic because
of reverse causality. As a further means of limiting the potential bias from the endogeneity of government support, we use lagged
rather than current values of government support and IV methods. Thus, the first-stage of Eq. (1) will be:
GSit = b0 + b1Nit 1 + b2 Xit + b3 Z it + u2it (2)

where N is the proportion of firms receiving government support within a district.

It is worth noting that the 2SLS estimators can be used and provide consistent results if the endogenous variables are binary
(Angrist, 2001; Angrist and Krueger, 2001; Angrist et al., 2010).

4. Empirical results and discussion

This section provides the results of the empirical analysis. Table 2 presents the results of the impact of government support on
total tax payments. First, regarding the role of the financial support covariate in determining firms’ tax payments, pooled data
estimations reveal that government assistance has a statistically insignificant influence on the dependent variable. However, the
results may be biased unless controlled for unobservable characteristics in the model. Attempting to control for time-invariant
unobserved features and overcome the challenges described, we conduct fixed-effect instrumental variable estimations. The adoption
of invalid, weak instrumental variables must be avoided, and therefore the econometric background for our instrumental variables is
formed based on several statistical tests.

273
V.V. Huong, L.K. Cuong Finance Research Letters 31 (2019) 270–277

Table 3
Technical support and total tax payments.
Variables (1) (2) (3) (4) (5)
Pooled OLS FE FE IV-GMM FE IV-GMM FE IV-GMM

Technical support 0.0864 0.0056 0.2250 0.4224 1.1170

(0.073) (0.052) (0.428) (0.425) (1.003)
Firm size in log 1.2130⁎⁎ 0.3790⁎⁎ 0.3586⁎⁎ 0.3416⁎⁎
(0.012) (0.025) (0.033) (0.042)
Firm age in log −0.2254⁎⁎ 0.0293 0.0267 −0.0048
(0.018) (0.037) (0.078) (0.092)
Export 0.3299*
(0.156)
Formal status of firms 0.2743⁎⁎
(0.098)
Household ownership −0.4388⁎⁎
(0.117)
PCI 0.0176⁎⁎
(0.005)
Constant −0.1935⁎⁎ 0.8353⁎⁎
(0.057) (0.099)
Year fixed effects Yes Yes Yes Yes Yes
Observations 9640 9640 4817 4796 3139
Number of panels 3917 1817 1810 1291
Instrumental variables Location-industry-year Location-industry-year Location-industry-year
average of technical support average of technical support average of technical support
Weak identification test (Cragg–Donald 79.957 78.386 18.823
Wald F statistic)
[Stock–Yogo weak ID test critical value 16.38 16.38 16.38
at 10%]

Notes: The dependent variable is log (1 + taxes). Robust standard errors are in parentheses.
⁎
Significant at 10%.
⁎⁎
Significant at 5%.
***Significant at 1%.

First, the values of the Cragg–Donald Wald F statistic in all models are 64.533, 66.068 and 28.824, greater than the reported
Stock–Yogo's weak identification critical value of 16.38. As a result, the relevance requirement of our instruments is satisfied. The
above specification test results of instrumental variable candidates suggest that the one period lag of mean value of government
support by industry, location and year was a good instrument. These results also support the validity of instrumental variables for
cases of basic and extended specifications.
Interestingly, a totally different picture emerges when using fixed-effect instrumental variable estimations. As reported in Table 2
column 3, the effect of government support on firms’ financial performance becomes significant after controlling for unobservable
characteristics and dynamic endogeneity. This finding reflects the fact that the results from OLS regression are biased. Specifically,
the estimated coefficient of government support shows that firms with such support make nearly 0.8% higher tax payments than
firms without this support. The positive, significant impact of government support on firms’ financial performance is further con-
firmed in extended specifications, the results of which are displayed in column 5 of Table 2. Our finding is consistent with political
legitimacy theory (Kirchler et al., 2008; Tayler, 2006), that trust in government, encouraged by receiving government support,
improves firms’ tax compliance. In this way, the government may increase their domestic revenues.
Among other firm-level variables, exporters tend to make higher tax payments than non-exporters. Firm size also has a positive
linkage with firm tax payments in all estimations in the research period. Farinha and Félix (2015) suggest that larger firms with easier
access to financing sources are less likely to be vulnerable to credit restrictions. Finally, becoming a formally registered firm leads to a
significant increase in the amount of tax payments. These results are in line with the findings of McKenzie and Sakho (2010), who also
conclude that formalisation results in additional tax payments.
In order to explore further the role of government support on tax revenues, financial support has been replaced by technical
support. As can be seen from Table 3, in contrast to the role of financial support from government, government technical support for
trade activities, training and technology has no statistically significant influence on tax payments from firms. Government financial
support, however, has a positive influence on the financial performance of SMEs. Clearly, support in the form of tax exemptions or
reductions, or loans with preferential interest rates from the Vietnam Development Bank (VDB) or Vietnam Bank for Social Policy
boost the financial efficiency of firms. These results also suggest that the role played by government support in firms’ total tax
payments depends mainly on the provision of financial support for firms.
Finally, to provide additional insight into what drives the positive linkage between government financial support and firms’ tax
payments, Table 4 explores potential avenues through which such support may have a positive effect on tax payments. This analysis
considers whether government financial support really benefits government revenue through such means as promoting higher firm
profitability, encouraging innovative activities, boosting the likelihood of a firm engaging in export activity, and spurring firms to
acquire formal status.

274
 V.V. Huong, L.K. Cuong

Table 4
Avenues for the effect of financial support on firm performance.
Variables Profitability Innovation 1 Innovation 2 Innovation 3 Export Formal status of firms
(1) (2) (3) (4) (5) (6)

Financial support 0.5738* 0.2219* 0.2042 0.4194⁎⁎ 0.0176 −0.1166

(0.335) (0.127) (0.166) (0.124) (0.054) (0.120)
Firm size in log 0.4958⁎⁎ 0.0126 0.0319* 0.0102 0.0175⁎⁎ 0.0095
(0.031) (0.013) (0.016) (0.012) (0.005) (0.009)
Firm age in log −0.0309 0.0194 −0.0418 −0.0462 0.0129 0.0013
(0.071) (0.029) (0.038) (0.028) (0.012) (0.020)
Year fixed effects Yes Yes Yes Yes Yes Yes
Observations 5056 5271 5271 5271 5262 3553

275
Number of panels 1892 1943 1943 1943 1941 1483
Instrumental variables Location-industry-year Location-industry-year Location-industry-year Location-industry-year Location-industry-year Location-industry-year
average of financial support average of financial support average of financial support average of financial support average of financial average of financial
support support
Weak identification test 59.188 72.402 72.402 72.402 73.489 27.457
(Cragg–Donald Wald F statistic)
[Stock–Yogo weak ID test critical value 16.38 16.38 16.38 16.38 16.38 16.38
at 10%]

Notes: Robust standard errors are in parentheses.

⁎
Significant at 10%.
⁎⁎
Significant at 5%.
***Significant at 1%.
Finance Research Letters 31 (2019) 270–277
V.V. Huong, L.K. Cuong Finance Research Letters 31 (2019) 270–277

Manufacturing firms receiving financial support from government proved to have a higher probability of profitability than their
counterparts without such support. The results are consistent with the majority of previous studies (Hansen et al., 2009) and indicate
that financial support is one of the decisive factors enabling firms to achieve higher profitability. The finding is consistent with the
conclusion drawn by Fjeldstad and Semboja (2001), that tax compliance is positively associated with the ability to pay.
Tsai et al. (2018) find that firms with stronger political connections are more likely to promote innovation. Our findings show that
financial support also seems to be a good predictor of advance in firms’ innovative activities. The estimated coefficients of financial
support exhibit a statistically significant linkage with firms’ innovative activities, such as improvements in new products and
technology.
However, Table 4 also shows that the probability of a firm engaging in export and becoming formally registered does not
necessarily follow from a firm's obtaining financial support. These results, partly consistent with previous studies (Vu et al., 2016),
show that government support does not motivate SMEs to develop exports.
In summary, our results show that government financial support assists firms already characterised by higher profitability and
innovation, which in turn lead to higher profits and higher tax revenues for government.

5. Conclusion

Examining the relationship between government support and tax revenues, this study provides new insights concerning the role of
trust in government, elicited through the provision of government financial support. Our results show that different types of gov-
ernment support for firms have differing effects on total tax revenues. Specifically, financial support has a positive effect on total tax
payments, whereas the effect of technical support on government revenues is insignificant. The beneficial results for total tax rev-
enues deriving from government financial support for firms are driven mainly by the positive effects of government support on firm
profitability and innovation, rather than on exporting activities and the formal status of firms. We suggest that tax authorities adopt
the approach of providing government support as a means of wielding social influence on firms’ tax compliance behaviour in order to
increase tax payments from firms.

Acknowledgements

This research was funded by Vietnam National Foundation for Science and Technology Development (NAFOSTED) under grant
number 502.01-2016.11.

References

Ali, M., Fjeldstad, O.-H., Sjursen, I.H., 2014. To pay or not to pay? Citizens’ attitudes toward taxation in Kenya, Tanzania, Uganda, and South Africa. World Dev. 64,
828–842.
Allingham, M.G., Sandmo, A., 1972. Income tax evasion: a theoretical analysis. J. Public Econ. 1, 323–338.
Angrist, J.D., 2001. Estimation of limited dependent variable models with dummy endogenous regressors: simple strategies for empirical practice. J. Bus. Econ. Stat. 19
(1), 2–28.
Angrist, J.D., Krueger, A.B., 2001. Instrumental variables and the search for identification: from supply and demand to natural experiments. J. Econ. Perspect. 15 (4),
69–85.
Angrist, J., Lavy, V., Schlosser, A., 2010. Multiple experiments for the causal link between the quantity and quality of children. J. Labor Econ. 28 (4), 773–824.
Castillo, J.A., Mora-Valencia, A., Perote, J., 2018. Moral hazard and default risk of SMEs with collateralized loans. Finance Res. Lett. 26, 95–99.
Chand, S.K., Moene, K.O., 1999. Controlling fiscal corruption. World Dev. 27, 1129–1140.
Coleman, B.E., 2006. Microfinance in Northeast Thailand: who benefits and how much? World Dev. 34 (9), 1612–1638.
Davis, J., Hecht, G., Perkins, J., 2003. Social behaviours, enforcement, and tax compliance dynamics. Acc. Rev. 78 (1), 39–69.
Farinha, L., Félix, S., 2015. Credit rationing for Portuguese SMEs. Finance Res. Lett. 14, 167–177.
Fisman, R., Svensson, J., 2007. Are corruption and taxation really harmful to growth? Firm level evidence. J. Dev. Econ. 83, 63–75.
Fjeldstad, O-H., Semboja, J., 2001. Why people pay taxes: the case of the development levy in Tanzania. World Dev. 29 (12), 2059–2074.
Hansen, H., Rand, J., Tarp, F., 2009. Enterprise growth and survival in Vietnam: does government support matter? J. Dev. Stud. 45 (7), 1048–1069.
Hoang, T.X., Pham, C.S., Ulubaşoğlu, M.A., 2014. Non-farm activity, household expenditure, and poverty reduction in rural Vietnam: 2002–2008. World Dev. 64,
554–568.
Jimenez, P., Iyer, G.S., 2016. Tax compliance in a social setting: the influence of social norms, trust in government, and perceived fairness on taxpayer compliance.
Adv. Acc. Incorp. Adv. Int. Acc. 34, 17–26.
Jovanovic, B., 1982. Selection and the evolution of industry. Econometrica 50 (3), 649–670.
Kirchler, E., Hoelzl, E., Wahl, I., 2008. Enforced versus voluntary tax compliance: the “slippery slope” framework. J. Econ. Psychol. 29, 210–225.
Malesky, E., 2010. The Vietnam Provincial Competitiveness Index 2010. USAID and VCCI (USAID/VNCI Policy Paper 15).
McKerchar, M., Evans, C., 2009. Sustaining growth in developing economies through improved taxpayer compliance: Challenges for policy makers and revenue
authorities. eJ. Tax Res. 7, 171–201.
McKenzie, D., Rapoport, H., 2007. "Network effects and the dynamics of migration and inequality: theory and evidence from Mexico. J. Dev. Econ. 84 (1), 1–24.
McKenzie, D., Sakho, Y.S., 2010. Does it pay firms to register for taxes? The impact of formality on firm profitability. Journal of Development Economics 91, 15–24.
Mont, D., Nguyen, C., 2013. Does parental disability matter to child education? Evidence from Vietnam. World Dev. 48, 88–107.
Rand, J., Tarp, F., 2012. Firm-level corruption in Vietnam. Econ. Dev. Cult. Change 60 (3), 571–595.
Rudolph, T.J., 2009. Political trust, ideology, and public support for tax cuts. Public Opin. Q. 73 (1), 144–158.
Tayler, T.R., 2006. Psychological perspectives on legitimacy and legitimation. Annu. Rev. Psychol. 57, 375–400.
Taylor, J.E., Rozelle, S., De Brauw, A., 2003. Migration and incomes in source communities: a new economics of migration perspective from China. Econ. Dev. Cult.
Change 52 (1), 75–101.
Torgler, B., 2007. Tax Compliance and Tax Morale: A Theoretical and Empirical Analysis. Edward Elgar Publishing, Inc, Northampton, MA.
Tsai, L.-C., Zhang, R., Zhao, C., 2018. Political connections, network centrality and firm innovation. Finance Res. Lett in press.

276
V.V. Huong, L.K. Cuong Finance Research Letters 31 (2019) 270–277

Tran, T.B., Grafton, R.Q., Kompas, T., 2009. Institutions matter: the case of Vietnam. J. Socio-Econ. 38, 1–12.
Vu, V.H., Tran, T.Q., Van Nguyen, T., Lim, S., 2018. Corruption, types of corruption and firm financial performance: new evidence from a transitional economy. J. Bus.
Ethics 148 (4), 847–858.
Vu, H.V., Holmes, M., Tran, T.Q., Lim, S., 2016. Firm exporting and productivity: what if productivity is no longer a black box. Baltic J. Econ. 16 (2), 95–113.
Zhang, H., Li, L., Zhou, D., Zhou, P., 2014. Political connections, government subsidies and firm financial performance: Evidence from renewable energy manu-
facturing in China. Renewable Energy 63, 330–336.
Ziqiao, Y., Yue, L., 2018. Signaling through government subsidy: certification or endorsement. Finance Res. Lett. 25, 90–95.

277