Promoting fintech financing for SME in S. Caucasian and Baltic States, during the Covid-19 global pandemic
Abstract
Purpose – to analyse the digitalization trends in the Central Caucasian (Georgia, Azerbaijan and Armenia) and Baltic States with the aim of reducing a financial gap for the Small and Medium size Enterprises in Georgia, Azerbaijan and Armenia.
Research methodology – comparative analysis between Baltic and Caucasian countries are made to analyse the basic positions and farther development opportunities for Georgia, Azerbaijan and Armenia.
Findings of the given paper – while SME sector crucially important contributor to employment, diversification and productivity in any country of the world and especially in developing ones, they still face significant credit constraints through traditional credit providing institutions. However, the trend is changing and modern digital technologies from the fintech area are providing new alternatives, which already had been widely used in Baltic, but still are waiting their chance in Georgia, Azerbaijan and Armenia, with different level of progress and readiness.
Research limitations – some statistical data does not exist for all six countries or were possible to obtain for different periods of time. Lack of academic literature on fintech in Caucasian countries.
Practical implications – It can provide a useful perspective for researchers, academics, investors, investment managers, decision-makers, and scientists.
Originality/Value – The paper analyses three advanced European Union member state’s (Lithuania, Latvia and Estonia) fintech positions and perspectives as a model of development for three developing Caucasian states (Georgia, Azerbaijan and Armenia).
Keyword : Small and Medium-sized Enterprises, fintech, Caucasian states, Baltic States, financial gap, alternative financing
How to Cite
Charaia, V., Chochia, A., & Lashkhi, M. (2021). Promoting fintech financing for SME in S. Caucasian and Baltic States, during the Covid-19 global pandemic. Business, Management and Economics Engineering, 19(2), 358-372. https://doi.org/10.3846/bmee.2021.14755
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Lu, L. (2018). Promoting SME finance in the context of the fintech revolution: A case study of the UK’s practice and regulation. Banking and Finance Law Review, 33, 317–343.
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Papava, V., & Charaia, V. (2020). The coronomic crisis and some challenges for the Georgian economy. GFSIS, Expert Opinion, (136). https://doi.org/10.2139/ssrn.3572124
Papava, V., & Charaia, V. (2021). The problem of the growth of Georgia’s Public Debt during the Economic Crisis under the COVID-19 Pandemic. SSRN. https://ssrn.com/abstract=3773635
Sangwan, V., Prakash, P., & Singh, S. (2019). Financial technology: a review of extant literature. Studies in Economics and Finance, 37(1), 71–88. https://doi.org/10.1108/SEF-07-2019-0270
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Shatakishvili, D. (2021). Post-conflict passageway opportunities in the South Caucasus and Georgian domination perspectives. International Journal of Research Publications, 77(1), 81–87. https://doi.org/10.47119/IJRP100771520211963
Thompson, J., Boschmans, K., & Pissareva, L. (2018). Alternative financing instruments for SMEs and entrepreneurs: The case of capital market finance (OECD SME and entrepreneurship papers No. 10). Organisation for Economic Cooperation and Development.
Walden, S. (2020). What is fintech and how does it affect how i bank? Forbes.
World Bank, & Cambridge Centre for Alternative Finance. (2020). The global Covid-19 fintech regulatory rapid assessment report. World Bank Group and University of Cambridge.
Yoshino, N., & Yamagami, H. (2017). Monetary economics: Practice and theory. Keio University Press (in Japanese).
Arzeni, S., & Akamatsu, N. (2014). ADB-OECD study on enhancing financial accessibility for SMEs: Lessons from recent crises. Asian Development Bank.
Baber, H. (2020). FinTech, crowdfunding and customer retention in Islamic Banks. Vision, 24(3), 260–268. https://doi.org/10.1177/0972262919869765
Benashvili, G. (2017). Boosting entrepreneurship in Georgia development of Fab Labs. Press Academia Procedia, 4(1), 29–33. https://doi.org/10.17261/Pressacademia.2017.512
Berger, A. N., & Udell, G. F. (2006). A more complete conceptual framework for SME finance. Journal of Banking & Finance, 30(11), 2945–2966. https://doi.org/10.1016/j.jbankfin.2006.05.008
Bucă, A., & Vermeulen, P. (2017). Corporate investment and bank-dependent borrowers during the recent financial crisis. Journal of Banking & Finance, 78, 164–180. https://doi.org/10.1016/j.jbankfin.2017.02.004
Cambridge Centre for Alternative Finance. (2020). The global alternative finance market benchmarking report. Cambridge University.
Capgemini. (2020). World payment report. Financial services analysis. https://www.capgemini.com/mx-es/wp-content/uploads/sites/24/2020/12/WPR-Hallazgos-Clave.pdf
Chang, V., Baudier, P., Zhang, H., Xu, Q., Zhang, J., & Arami, M. (2020). How Blockchain can impact financial services–The overview, challenges and recommendations from expert interviewees. Technological Forecasting and Social Change, 158, 120166. https://doi.org/10.1016/j.techfore.2020.120166
Charaia, V. (2014). Local investment climate and the role of (sustainable) FDI: The case of Georgia. International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 8(2), 425–428.
Charaia, V. (2017). The role of multinational enterprises’ investments in emerging country’s economic development, case of Georgia. International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 11(3).
Charaia, V., & Lashkhi, M. (2020). Georgia and China: The economic ties that could one day bind. A Sea Change?: China’s Role in the Black Sea, 26.
Charaia, V., Chochia, A., & Lashkhi, M. (2018). The Caucasus 3 plus the Baltic 3 and economic cooperation with China. Baltic Journal of European Studies, 8(2), 44–64. https://doi.org/10.1515/bjes-2018-0015
Charaia, V., Chochia, A., & Lashkhi, M. (2020). The impact of fdi on Economic development: The Case of Georgia. TalTech Journal of European Studies, 10(2), 96–116. https://doi.org/10.1515/bjes-2020-0017
Columba, F., Gambacorta, L., & Mistrulli, P. E. (2010). Mutual Guarantee institutions and small business finance. Journal of Financial Stability, 6(1), 45–54. https://doi.org/10.1016/j.jfs.2009.12.002
Cornell University, INSEAD, & the World Intellectual Property Organization. (2020). Global Inovation Index: Who will finance innovation? https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020.pdf
Cornelli, G., Davidson, V., Frost, J., Gambacorta, L., & Oishi, K. (2019). SME finance in Asia: Recent innovations in fintech credit, trade finance, and beyond (ADBI Working Paper Series No. 1027). Asian Development Bank.
Datareportal. (n.d.). http://www.datareportal.com
Demirgüç-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2018). The Global Findex Database 2017: Measuring financial inclusion and the fintech revolution. The World Bank. https://doi.org/10.1596/978-1-4648-1259-0
EU4business. (2019). Investing in SMEs in the Eastern partnership. Azerbaijan country report. https://eu4business.az/uploads/20/08/10/f3b51b31d9a45ddbdd0f8b6f48689562.pdf
European Commision. (2019a). SBA Fact sheet Estonia. https://ec.europa.eu/docsroom/documents/38662/attachments/9/translations/en/renditions/native
European Commision. (2019b). SBA Fact sheet Latvia. https://ec.europa.eu/docsroom/documents/38662/attachments/17/translations/en/renditions/native
European Commision. (2019c). SBA Fact sheet Lithuania. https://ec.europa.eu/docsroom/documents/38662/attachments/18/translations/en/renditions/native
Ford, D., & Joliet, J. (2020). Payment acceptance will never be the same after the COVID-19 pandemic (report). Gartner.
G20. (2020). Promoting digital and innovative SME financing. International Bank for Reconstruction and Development, The World Bank. https://www.gpfi.org/sites/gpfi/files/saudi_digitalSME.pdf
Global Findex database. (2017). MSME Finance Gap Database. http://smefinanceforum.org/sites/default/files/MSME%20Finance%20Gap%202018-19%20Update%20(public)%20.xlsx
Hogeforster, M. (2014). Future challenges for innovations in SMEs in the Baltic Sea Region. Procedia-Social and Behavioral Sciences, 110, 241–250. https://doi.org/10.1016/j.sbspro.2013.12.867
Hua, X., Huang, Y., & Zheng, Y. (2019). Current practices, new insights, and emerging trends of financial technologies. Industrial Management & Data Systems, 119(7), 1401–1410. https://doi.org/10.1108/IMDS-08-2019-0431
INSEAD. (2011). Global Inovation Index. https://www.wipo.int/edocs/pubdocs/en/economics/gii/gii_2011.pdf
International Finance Corporation. (2010). Scaling-up SME access to financial services in the developing world. International Finance Corporation, World Bank Group, Washington D.C.
Jakšič, M., & Marinč, M. (2019). Relationship banking and information technology: The role of artificial intelligence and FinTech. Risk Management, 21(1), 1–18. https://doi.org/10.1057/s41283-018-0039-y
Lashkhi, M., & Charaia, V. (2017). Investment development path and motivations for Foreign Direct Investment in Georgia. World Academy of Science, Engineering and Technology, International Journal of Economics and Management Engineering, 11(11), 3213.
Lee, I., & Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, 61(1), 35–46. https://doi.org/10.1016/j.bushor.2017.09.003
Lu, L. (2018). Promoting SME finance in the context of the fintech revolution: A case study of the UK’s practice and regulation. Banking and Finance Law Review, 33, 317–343.
McKinzey. (2019). Global Payment Report 2019: Amid sustained growth, accelerating challenges demand bold actions. New York. https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/tracking%20the%20sources%20of%20robust%20payments%20growth%20mckinsey%20global%20payments%20map/global-payments-report-2019-amid-sustained-growth-vf.ashx
McKinzey. (2020). The 2020 McKinsey Global Payments Report. New York. https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/accelerating%20winds%20of%20change%20in%20global%20payments/2020-mckinsey-global-payments-report-vf.pdf
Organisation for Economic Co-operation and Development. (2016). Entrepreneurship at a Glance 2016. OECD Publishing, Paris. http://www.worldsmeforum.org/wp-content/uploads/2016/10/EntrepreneurshipataGlance.pdf
Organisation for Economic Co-operation and Development. (2017, June 7–8). Enhancing the contributions of SMEs in a global and digitalised economy. In Meeting of the OECD Council at Ministerial Level. OECD Publishing, Paris. https://www.oecd.org/industry/C-MIN-2017-8-EN.pdf
Organisation for Economic Co-operation and Development. (2020). SME Policy Index. Eastern Partner Countries 2020. OECD, European Union, European Training Foundation and European Bank for Reconstruction and Development.
Ozili, P. K. (2018). Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review, 18(4), 329–340. https://doi.org/10.1016/j.bir.2017.12.003
Papava, V., & Charaia, V. (2020). The coronomic crisis and some challenges for the Georgian economy. GFSIS, Expert Opinion, (136). https://doi.org/10.2139/ssrn.3572124
Papava, V., & Charaia, V. (2021). The problem of the growth of Georgia’s Public Debt during the Economic Crisis under the COVID-19 Pandemic. SSRN. https://ssrn.com/abstract=3773635
Sangwan, V., Prakash, P., & Singh, S. (2019). Financial technology: a review of extant literature. Studies in Economics and Finance, 37(1), 71–88. https://doi.org/10.1108/SEF-07-2019-0270
SME Finance Forum. (2021). MSME finance gap. https://www.smefinanceforum.org/data-sites/msme-finance-gap
Schweitzer, M. E., & Barkley, B. (2017). Is ‘Fintech’ good for small business borrowers? Impacts on firm growth and customer satisfaction (Working Paper No. 17-01). Federal Reserve Bank of Cleveland. https://doi.org/10.26509/frbc-wp-201701
Shatakishvili, D. (2021). Post-conflict passageway opportunities in the South Caucasus and Georgian domination perspectives. International Journal of Research Publications, 77(1), 81–87. https://doi.org/10.47119/IJRP100771520211963
Thompson, J., Boschmans, K., & Pissareva, L. (2018). Alternative financing instruments for SMEs and entrepreneurs: The case of capital market finance (OECD SME and entrepreneurship papers No. 10). Organisation for Economic Cooperation and Development.
Walden, S. (2020). What is fintech and how does it affect how i bank? Forbes.
World Bank, & Cambridge Centre for Alternative Finance. (2020). The global Covid-19 fintech regulatory rapid assessment report. World Bank Group and University of Cambridge.
Yoshino, N., & Yamagami, H. (2017). Monetary economics: Practice and theory. Keio University Press (in Japanese).