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Finance-Growth Nexus in Time of Covid-19 Lockdown: Case of Iranian MSMES

Author

Listed:
  • Iman Cheratian

    (Tarbiat Modares University in Tehran)

  • Saleh Goltabar

    (Academic Center for Education, Culture, and Research (ACECR))

Abstract

This paper examines the relationship between access to finance and financial constraint to growth in sales and production for Micro, Small, and Medium Enterprises (MSMEs) in Iran. Our study, based on data from 486 enterprises across five provinces, demonstrates that external financing is positively associated with the growth of MSMEs. While firms’ obstacle in accessing external financing exerts a negative and significant impact on growth. The results also indicate that access to technology, owner education, and new employment are positively related with the growth of firms. On the other hand, the experience of bankruptcy and labor adjustment has a negative and significant impact on the sales and production growth of MSMEs. Finally, financed firms that have not been affected by COVID-19 exhibit greater growth than those that have been impacted by the pandemic. However, in the absence of external financing, the decline in growth is more pronounced for firms that have been affected by the COVID-19 pandemic.

Suggested Citation

  • Iman Cheratian & Saleh Goltabar, 2023. "Finance-Growth Nexus in Time of Covid-19 Lockdown: Case of Iranian MSMES," Working Papers 1695, Economic Research Forum, revised 20 Dec 2023.
    • Handle: RePEc:erg:wpaper:1695
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