Does financing SMEs guarantee inclusive growth and environmental sustainability in the European union?

Victor Onyebuchi Okolo; Millicent Ifeyinwa Ohanagorom; Ebere Rejoice Okocha; Obumneke Bob Muoneke; Kingsley Ikechukwu Okere

doi:10.1016/j.heliyon.2023.e15095

Does financing SMEs guarantee inclusive growth and environmental sustainability in the European union?

Heliyon. 2023 Apr 6;9(4):e15095. doi: 10.1016/j.heliyon.2023.e15095. eCollection 2023 Apr.

Authors

Victor Onyebuchi Okolo¹, Millicent Ifeyinwa Ohanagorom², Ebere Rejoice Okocha³, Obumneke Bob Muoneke^{4

5}, Kingsley Ikechukwu Okere^{6

7}

Affiliations

¹ Department of Marketing, University of Nigeria Nsukka, Enugu Campus, Enugu State, Nigeria.
² Department of Finance, Performance and Marketing, Teesside University International Business School, Middlesbrough, UK.
³ Department of Marketing, Evangel University Akaeze, Ebonyi State, Nigeria.
⁴ FITC Nigeria, Murtala Muhammed Way, Ebute-Metta, Lagos State, Nigeria.
⁵ Department of Finance, University of Lagos, Akoka-Yaba, Lagos State, Nigeria.
⁶ Entrepreneurial /Skills Development Centre/Enterprise Venture, Gregory University, Uturu, Abia State, Nigeria.
⁷ Department of Economics, Banking and Finance, Gregory University, Uturu, Abia State, Nigeria.

Abstract

At the heart of the EU cohesion policy and the European Green deal lies the underlying sub-goals not limited to; financing the transition, promoting economic well-being of regions, take everyone along, achieving climate neutrality and a zero pollution Europe which the small and medium enterprises positions as the perfect conduit to achieve the aforementioned sub-goals in the case of Europe. Our study seeks to investigate if credit flowing from private sector units and government-owned enterprises to SMEs guarantees inclusive growth and environmental sustainability in EU-27 member states using data collected from OECD Stat. Database and the World Bank database from 2006 to 2019. Findings from the econometric analysis shows that SMEs activities is a significant and positive predictor of environmental pollution in the EU. In the case of inclusive growth countries cohort in the EU, both credit flowing from private sector funding institutions and government-owned enterprises to SMEs enhances a positive SME growth impact on environmental sustainability. In the case of non-inclusive growth countries cohort in the EU, credit flowing from private sector to SMEs enhances the positive impact of SME growth on environmental sustainability while credit flowing from government-owned enterprises to SMEs intensify the negative impact of SME growth on environmental sustainability.

Keywords: Environmental sustainability; European union; Inclusive growth; MMQR; SMEs.