THE IMPACT OF SMALL AND MEDIUM ENTERPRISE FINANCING ON ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM UZBEKISTAN
DOI:
https://doi.org/10.5281/zenodo.17757039Keywords:
SME financing, economic growth, panel data analysis, Granger causality, cointegration, GMM estimation, Uzbekistan.Abstract
This study examines the causal relationship between small and medium enterprise (SME) financing and economic
growth in Uzbekistan using panel data from fourteen regions for the period 2010–2024. A comprehensive econometric
framework, including panel unit root tests, Pedroni cointegration analysis, Granger causality tests and Generalized Method
of Moments (GMM) estimation, is employed to assess how SME credit allocation affects regional GDP, employment levels
and overall economic development. The empirical results indicate a statistically significant positive relationship between
SME credit volume and economic growth, with a 1 percent increase in SME financing associated with an approximate
0.23 percent rise in regional GDP. Granger causality analysis reveals bidirectional causality between SME financing and
economic growth, demonstrating that credit expansion and economic development reinforce each other. Cointegration
tests confirm the presence of long-run equilibrium relationships among the variables, while robustness checks validate
the consistency of the findings. The results emphasize the importance of financial sector development, targeted credit
policies and institutional strengthening to support sustainable SME development in Uzbekistan
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