Linking financial ecosystem and the growth of young SMEs: evidence from Spanish regions

Manuela Vega-Pascual (), Filippo di Pietro, María-José Palacín-Sánchez and Rafaela Alfalla-Luque
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Manuela Vega-Pascual: Universidad de Sevilla
Filippo di Pietro: Universidad de Sevilla
María-José Palacín-Sánchez: Universidad de Sevilla
Rafaela Alfalla-Luque: Universidad de Sevilla

Review of Managerial Science, 2025, vol. 19, issue 6, No 8, 1859-1888

Abstract: Abstract This study analyses the effect of the financial ecosystem on the growth of young firms at the regional level. This subject is relatively new in entrepreneurial finance research since most of the previous studies have failed to consider all the alternative sources of external financing to which young firms have access. This study highlights the relevance of alternative resources and actors in the financial environment beyond traditional banks, such as crowdfunding, business angels, peer-to-peer lending, accelerators, incubators and venture capital. Specifically, our research incorporates a proxy of the development of the financial ecosystem based on survey data from the Global Entrepreneurship Monitor (GEM). Moreover, our investigation uses a sample of young small and medium-sized enterprises (SMEs) representing every Spanish region between 2008 and 2015. The empirical analysis applies panel data methodology. The results show that the growth of young enterprises depends on developing a regional financial ecosystem, evidencing that better access to external finance favours the growth of young firms. This relationship is even more relevant among early-stage firms, which suggests that firm age moderates the relationship between the regional financial ecosystem and the growth of young SMEs.

Keywords: Firm growth; Young SMEs; Regional financial development; Entrepreneurial finance (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11846-024-00815-4

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