The intent of this thesis is to explore the effects of small-medium enterprises' (SME) access to capital on country economic performance and examine the differences between the developed world and the developing world. Specifically, two main questions are addressed: whether there are significantly higher barriers-to-entry through a lack of access to credit in developing countries as well as whether SMEs access to credit around the world has changed over time.
Using a sample of 46 countries and grouping them two different ways (developed vs developing and free-market vs non-free-market), I find a negative correlation between the SMEs access to capital and country performance for both developed and developing economies. Surprisingly, the free-market and non-free-market economies differ in that free-market economies SME access to funding is positively correlated to GDP per capita and GNI for developed countries, while non-free-market economies SME access to funding are negatively correlated with country growth measurements (real GDP growth and gross fixed capital formation). The data do not, however, confidently support the conclusions that SMEs exert a causal impact on growth. Furthermore, I find that over the last decade, access to finance SME has remained relatively stagnant in developing countries, despite best efforts from the IMF and the World Bank.
Bachelor Science in Business Administration (B.S.B.A.)
College of Business Administration
Reed, William B., "Effects of SME Access to Capital on Country Economic Performance: Understanding the Differences Between the Developed and the Developing World" (2019). Honors Undergraduate Theses. 660.