SME Financial Inclusion for Sustained Growth in the Middle East and Central Asia

Mishel Ghassibe, Maximiliano Appendino and Samir Elsadek Mahmoudi

No 2019/209, IMF Working Papers from International Monetary Fund

Abstract: This paper offers empirical evidence that greater financial inclusion of small and medium enterprises (SMEs) can promote higher economic growth and employment, especially in the Middle East and Central Asia regions. First, we show that countries with higher SME financial inclusion exhibit more effective monetary policy transmission and tax collection. Second, we find substantial employment and labor productivity growth gains at the firm level from access to credit, gains that are higher for SMEs. We also obtain evidence of a substantial positive impact on SME employment and labor productivity growth from improved credit bureau coverage and insolvency regimes. Finally, cross-country aggregate evidence confirms the employment and growth gains from SME financial inclusion, which appear larger in the Middle East and Central Asia than in other regions.

Keywords: WP; SME financial inclusion; Small and Medium Sized Enterprises; Financial Inclusion; Economic Growth; monetary policy transmission; growth gain; output gap; SME Financial inclusion index; labor productivity gain; SME employment; employment growth; Small and medium enterprises; Labor productivity; Productivity; Employment; Middle East and Central Asia (search for similar items in EconPapers)
Pages: 23
Date: 2019-09-27
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Citations: View citations in EconPapers (4)

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