Does better access to finance help firms deal with the COVID-19 pandemic? Evidence from firm-level survey data

The impact of the firm's pre-pandemic financial condition on the likelihood of a decline in its sales due to the COVID-19 pandemic in 35 developing and emerging countries is estimated. Results show that better access to finance reduces the likelihood of a decline in sales. Access to finance is more effective in arresting sales declines when firms fear that production cuts may lead to the loss of skilled workers and hard-to-replace input suppliers. It is less effective when workers, like women, do not wish to continue working for health or family reasons. Important policy implications are discussed. © 2023 John Wiley & Sons Ltd.

Investigating the relationship between government support and SMEs' sustainability through financial and green lenses

PurposeTo be successful on a global scale, small- and medium-sized enterprises (SMEs) need government support (GS) for innovation, sustainability and creativity. GS has always been a constructive influence on enterprises. This paper aims to examine the role of GS in assessing financial literacy (FL), access to finance (AF) and green value co-creation (GVC) for the sustainability of SMEs. Design/methodology/approachThis study's sample comprises SMEs in Lahore, Pakistan. Data collection started in December 2021 and ended in February 2022. Using convenient sampling, 320 responses were collected from SMEs and included in data analysis. Hypotheses were tested, and model fit was checked through the software AMOS 22. FindingsIt has been examined that GS plays a pivotal role in acquiring FL, AF and GVC for the sustainability of SMEs. Research limitations/implicationsIncreasing the sample size will give a more demonstrative picture as the population size is quite large. Future researchers should design causal relationships, linking these variables through longitudinal research. Originality/valueNo study has been conducted on SMEs of developing economies using these variables. This study contributes to the literature by providing a comprehensive model and identifying GSs importance in achieving SMEs' sustainability through financial and green lenses. This research significantly impacts government policymakers and SMEs by giving them insight into the importance of green practices, financial capabilities and SMEs' sustainability.

COVID-19 adaptive strategy and SMEs' access to finance

The recent outbreak of COVID-19 has had colossal repercussions for all economic agents including households, corporations, and governments worldwide. Each economic agent responded in their own way to mitigate or at least diminish the scale of that impact. Small and medium-sized enterprises (SMEs) also countered the COVID-19 pandemic to their highest capacity despite being more vulnerable to crises. Many SMEs experienced shutdowns or declared bankruptcy due to the ineptitude and lack of financial resources or effective strategic response to cope with this unprecedented shock. In this paper, we assess the impact of the COVID-19 pandemic coping strategies such as adjusting the process and product, shifting business activity online, and remote working arrangements on SMEs' access to finance. Using the World Bank's COVID-19 impact survey data collected between 2020 and mid-2021 from 42 countries, we find that better strategies adopted by SMEs increase their likelihood of getting new credit from government and commercial banks. The results remain robust to alternative test settings. Our findings offer significant and timely contributions to SMEs' access to finance and to the practicing managers on adopting and adjusting strategies in response to crises or disruptions. © 2023 Informa UK Limited, trading as Taylor & Francis Group.

The impact of COVID-19 on small- and medium-sized enterprises (SMEs): empirical evidence for green economic implications.

Small- and medium-sized enterprises (SMEs) in China have been hit hard by the coronavirus (COVID-19) outbreak, which has jeopardized their going out of business altogether. As a result, this research will shed light on the long-term impacts of COVID-19 lockdown on small businesses worldwide. The information was gathered through a survey questionnaire that 313 people completed. Analyzing the model was accomplished through the use of SEM in this investigation. Management and staff at SMEs worldwide provided the study's data sources. Research shows that COVID-19 has a significantly bad influence on profitability, operational, economic, and access to finance. In the study's findings, outside funding aids have played an important role in SMEs' skill to persist and succeed through technological novelty than in their real output. SME businesses, administrations, and policymakers need to understand the implications of this study's results.

Assessing the Innovation-finance Nexus for SMEs: Evidence from the Arab Region (MENA)

SMEs in the Arab region are widely viewed as important for their multiple roles, notably in employment creation. Yet, they consistently encounter several constraints such as financing, which impede innovation, growth and internationalisation. This paper examines the external finance-innovation nexus for SMEs operating in five non-oil Arab countries—Egypt, Jordan, Lebanon, Morocco and Tunisia. To achieve this, a probit regression with instrumental variables is applied to firm-level data from the World Bank Enterprise Surveys. The primary findings reveal that the external finance providers are more likely to be reluctant to fund SMEs’ innovation;yet, it thrives with finance. The findings accord with the hypothesis that the accessibility to external funds is a mainstay of SMEs’ innovation. There is a need to develop policies that support equity and debt capitals for innovative SMEs.

Determinants and consequences of SME insolvency risk during the pandemic.

The COVID-19 pandemic posed an existential threat to European SMEs' financial resilience with significant consequences for the European economy. Using unique firm-level data on SME financing conditions, this paper proposes a new insolvency risk measure based on survey responses. We show that SME insolvency risk increased, on average, by approximately 21% during the pandemic. Problems with finding customers and the cost of production and labor contributed notably to SME insolvency risk during this period, and SMEs also saw deterioration in their access to finance. Innovation worked as a mitigating factor during the pandemic, and innovative SMEs were more resilient, maintained their client base, and saw favorable access to bank lending. Our results point out that SME innovation can prevent the number of insolvencies from rising significantly in the long term.

I can see the opportunity that you cannot! A nexus between individual entrepreneurial orientation, alertness, and access to finance

Purpose>The purpose of this study is to demonstrate how alertness enable small and medium scale enterprise (SME) owners to leverage their individual entrepreneurial orientation (IEO) such as risk-taking, pro-activity, innovation, passion and perseverance in a better way to recognize opportunities for financial resources as compared to their counterparts who are not alert. Moreover, it elaborates on the mediating role of opportunity recognition of financial resources between IEO and SMEs’ access to finance (AF).Design/methodology/approach>A three-wave time-lagged survey from a stratified sample of 271 small and medium scale business owners in Pakistan was conducted and the data were analysed using PROCESS models 1 and 4.Findings>The findings grounded in the theory of Action Regulation, signify that the IEO of small and medium scale business owners helps them attain financial resources through opportunity recognition capacity which is an action characteristic. Moreover, the IEO of SME owners, coupled with entrepreneurial alertness (EA;a cognitive pre-action state), amplifies their ability to recognize opportunities for financial resource availability.Originality/value>This is one of the initial studies to test the IEO scale, including passion and perseverance. Moreover, it has added to the individual-level antecedents of AF in small and medium scale businesses through the role of EA and opportunity recognition.

An empirical study into the informal sector: The link between entrepreneurial activity and firm performance

Orientation: Within an emerging market context, the informal sector’s role was deemed critical towards achieving ideals of a developmental state. Given this perceived importance, there was a need to continually study informal sector entrepreneurial activity and its ramifications on firm performance. Research Purpose: This study aimed to understand the link between informal sector entrepreneurial activities and firm performance using a sample of firms operating in Durban, South Africa. Motivation of the study: Exploring those entrepreneurial activities that either enhanced or impeded the informal sector was deemed critical in the effectual and efficient operation of the sector. In driving the firm performance agenda ascertaining the role of factors such as (1) entrepreneurial culture, (2) entrepreneurial education and skills, (3) government and incubation support and finally, (4) access to finance can enhance the informal sector through the provision of evidence-based interventions. Research approach/design/method: A quantitative survey research approach was used to collect data from 152 informal sector businesses operating in the city of Durban in South Africa. A convenience sampling technique was used to access the respondents. Data were analysed using the Statistical Package for Social Sciences (SPSS) programme version 23 using correlation and regression tests. Main findings: The findings revealed the adoption of an entrepreneurship culture, including access to entrepreneurship education and skills to predict a firm’s financial and non-financial performance significantly. Furthermore, it was found that government and incubation support predicted a firm’s financial performance. However, it was also established that government and incubation support had no unique contribution to non-financial performance. Practical/managerial implications: Suggestions were made based on the findings that entrepreneurial activities have a bearing on informal sector business performance. These findings became a helpful intervention towards enhancing the performance of informal businesses. Contribution/value-add: This study contributed to understanding entrepreneurial activities that either enhanced or impeded informal businesses’ performance.