What Determines SME Financial Inclusion in Emerging Economies? Deriving Policy Implications Using a Logistic Regression Approach

Bhagirath Prakash Baria () and Devanshi Himanshu Mehta
Additional contact information
Bhagirath Prakash Baria: The Maharaja Sayajirao University of Baroda
Devanshi Himanshu Mehta: The Maharaja Sayajirao University of Baroda

A chapter in Financial Resilience and Environmental Sustainability, 2025, pp 411-431 from Springer

Abstract: Abstract Small and Medium Enterprises continue to be the backbone of emerging economies given the large-scale concentration of output and employment in this sector. A necessary condition for their development is the availability of adequate financial resources. Finance remains the foremost constraint for these firms particularly in emerging economies given their underdeveloped credit markets and higher substitutability with informal sources of finance. Policymakers in emerging economies need to grasp the factors affecting SME financial inclusion as credit markets are generally incapable of fulfilling this objective without policy interventions. This paper engages in a study of how the Governments in Brazil, Russia, India and China (BRIC) can prudently push financial inclusion among SMEs by using granular data on more than 10,000 firms. The issue is examined via the firm-characteristics model to study the determinants of SME financial inclusion in BRIC. This study deploys a multiple logistic regression model specified within a discrete response framework. Firm characteristics that affect the demand for finance—which are largely endogenous to the SMEs and the supply of finance—that are largely exogenous to the SMEs are incorporated into the structure of the model. Results indicate that supply-side considerations have played a prominent role in shaping the likelihood of SMEs accessing finance. The study also finds that the optimal financial inclusion strategy would be to prioritize policy-endogenous determinants of SME financial inclusion rather than putting resources into the policy-exogenous forces.

Keywords: Access to finance; Banking; BRIC; Econometrics; Emerging economies; Enterprise surveys; Financial inclusion; Fintech; Logistic regression; SMEs (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:sprchp:978-981-96-4269-4_18

Ordering information: This item can be ordered from
http://www.springer.com/9789819642694

DOI: 10.1007/978-981-96-4269-4_18

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().