Financial development, legal systems and SME finance: Cross-country evidence

• DOI: 10.1016/j.iref.2023.07.021
• Publication Date: 2023-07-21T15:34:45Z
• Authors: Hongzhi Wang; Xin Xiang; Liang Han
• Keywords: Access to Finance

This paper provides a comprehensive investigation into the selection of different sources finance for both short-term and long-term projects by SMEs, utilizing cross-country data from World Bank. The results highlight crucial roles played financial development legal system in countries where SMEs operate. Specifically, with better developed systems, are more likely to use formal external (e.g., bank non-bank institutions) meet their short term long financing needs, highlighting importance development. Furthermore, this evidence on moderating effects systems favourable impacts SME finance. In particular, SMEs' access pronounced stronger investor protection, such as common law countries, than those civil syystems facilitating suggests that policymarkers should consider strengthening protection promote growth