Access to Finance, Firm Growth Performance, and Innovation Activity: Cross-Country Evidence from Enterprise Survey Indicators
Keywords:
Access to finance, firm growth performance, innovation activity, Enterprise Survey indicators, cross-country analysisAbstract
Access to Finance, Firm Growth Performance, and Innovation Activity examines how financial access and innovation activity relate to firm growth across countries. This study uses country-level Enterprise Survey indicators covering 146 countries from 2011 to 2020. The main objective is to assess whether access to finance improves firm growth performance and whether innovation activity moderates this relationship. Firm growth performance is measured mainly through real annual sales growth, while employment growth and labor productivity growth are used as supporting measures. Access to finance is represented through bank loan access, finance-related obstacles, loan rejection, and collateral requirements. Innovation activity is measured through product innovation, process innovation, R&D spending, market novelty, and technology adoption. The data were cleaned, reshaped into country-year observations, and analyzed using descriptive statistics, correlation analysis, regression analysis, and moderation analysis. The findings show that access to finance has a weak positive relationship with sales growth and a stronger relationship with productivity growth. Innovation activity shows limited direct influence on sales growth but is positively related to employment growth. The moderation effect is not supported, indicating that innovation activity does not significantly change the finance-growth relationship. The study concludes that finance and innovation are relevant to firm performance, but their effects differ across growth measures.
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