TY - JOUR
T1 - Innovation and SME finance
T2 - Evidence from developing countries
AU - Wellalage, Nirosha Hewa
AU - Fernandez, Viviana
N1 - Publisher Copyright:
© 2019 Elsevier Inc.
PY - 2019/11
Y1 - 2019/11
N2 - This paper explores the relationship between firm-level innovation and external finance for small and medium enterprises (SMEs). Our sample consists of 13,430 firms from Eastern Europe and Central Asian countries. A propensity score matching approach reports a positive relationship between formal finance and product and process innovation, which is greater for early-stage SMEs than for mature counterparts. However, informal finance has more significant impact on mature firms' product innovation. Our empirical evidence highlights policy implications for countries desiring to enhance the innovation of their SMEs by improving the external finance of these SMEs.
AB - This paper explores the relationship between firm-level innovation and external finance for small and medium enterprises (SMEs). Our sample consists of 13,430 firms from Eastern Europe and Central Asian countries. A propensity score matching approach reports a positive relationship between formal finance and product and process innovation, which is greater for early-stage SMEs than for mature counterparts. However, informal finance has more significant impact on mature firms' product innovation. Our empirical evidence highlights policy implications for countries desiring to enhance the innovation of their SMEs by improving the external finance of these SMEs.
KW - Developing countries
KW - External finance
KW - Innovation
KW - Propensity score matching methods
KW - SMEs
UR - http://www.scopus.com/inward/record.url?scp=85068579650&partnerID=8YFLogxK
U2 - 10.1016/j.irfa.2019.06.009
DO - 10.1016/j.irfa.2019.06.009
M3 - Article
AN - SCOPUS:85068579650
SN - 1057-5219
VL - 66
JO - International Review of Financial Analysis
JF - International Review of Financial Analysis
M1 - 101370
ER -