Sources of SMEs Financing and Their Impact on Economic Growth across the European Union: Insights from a Panel Data Study Spanning Sixteen Years

Larissa M. Batrancea (), Mehmet Ali Balcı (), Leontina Chermezan, Ömer Akgüller, Ema Speranta Masca and Lucian Gaban
Additional contact information
Larissa M. Batrancea: Department of Business, Babeş-Bolyai University, 7 Horea Street, 400174 Cluj-Napoca, Romania
Mehmet Ali Balcı: Department of Mathematics, Muğla Sıtkı Koçman University, Muğla 48000, Turkey
Leontina Chermezan: Department of Economics and Business Administration, Babeş-Bolyai University, 58–60 Teodor Mihali Street, 400591 Cluj-Napoca, Romania
Ömer Akgüller: Department of Mathematics, Muğla Sıtkı Koçman University, Muğla 48000, Turkey
Ema Speranta Masca: Faculty of Economics and Law, “George Emil Palade” University of Medicine, Pharmacy, Science and Technology of Targu Mures, 38 Gheorghe Marinescu Street, 540566 Targu Mures, Romania
Lucian Gaban: Faculty of Economics, “1 Decembrie 1918” University of Alba Iulia, 15–17 Unirii Street, 510009 Alba Iulia, Romania

Sustainability, 2022, vol. 14, issue 22, 1-18

Abstract: Getting access to sufficient funding is the keystone for the development of any business, but especially for small and medium enterprises (SMEs). These economic entities are crucial players in the global economy since they include almost 90% of companies, provide jobs for nearly 50% of the global workforce, and enhance long-term economic growth. In this context, our study explores important sources concerning the financing of small and medium enterprises and their impact on economic growth during the period 2005–2020 with data from SMEs covering the 28 countries belonging to the European Union. The set of predictors included Strength of legal rights index, Days sales outstanding, Bad debt loss, Interest rate, Bank support, Business angels, Private lenders, and Public support. The set of dependent variables included Cost of loans, Equity fund, GDP growth rate, and Value added growth rate. Our methodological approach was complex, it considered a panel data analysis with a first-difference generalized method of moments estimator and a multiplex time series analysis. The novelty of the study resides in combining the two methods in order to investigate significant drivers of economic growth across the EU. Empirical results showed that economic growth was mainly triggered by predictors such as Interest rate, Business angels, Bank support, and Public support. Moreover, the valuable mathematical insights elicited by the multiplex time series analysis suggested that European economies cooperated intensively through SME activities. Based on our empirical results, national and regional authorities should enact adequate policies to support business endeavors of small and medium enterprises.

Keywords: small and medium enterprises; public support; loans; business angels; private funds; exports; multiplex; time series analysis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/22/15318/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/22/15318/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:22:p:15318-:d:976509

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().