Comparative Analysis of SME Financing Impact on Economic Growth: Evidence From Developed and Developing Economies

Mohamed Rochdi Keffala and Abdelaziz Krichen

Review of Development Economics, 2026, vol. 30, issue 3, 1583-1599

Abstract: This study aims to investigate the impact of small and medium‐sized enterprise (SME) financing on economic growth across developed and developing economies using a dynamic Panel Vector Autoregressive (PVAR) model. Based on panel data from 20 countries over the period 2013–2022, the analysis reveals that in developed economies, SME debt financing significantly stimulates GDP growth, while equity financing has a more modest yet positive effect. In developing economies, both debt and equity financing contribute positively to growth; however, high inflation exerts a dampening effect on economic performance. Lending interest rates exhibit no statistically significant influence in developing contexts. Employing the Generalized Method of Moments (GMM) for estimation, the study underscores the pivotal role of SME financing in fostering economic expansion and offers policy recommendations aimed at enhancing financial access to support sustainable development. By adopting a cross‐country dynamic framework and jointly examining debt and equity financing under diverse macro‐financial conditions, this study provides novel comparative evidence that advances understanding of the SME–finance–growth nexus beyond the single‐country and static approaches prevalent in prior research.

Date: 2026
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