Small business and job creation: Evidence from the EBRD regions

This Brief reports on the impact of access to finance, and related advisory services, on employment in small- and medium-sized enterprises (SMEs) in the EBRD regions.

While small- and medium-sized enterprises (SMEs) account for the vast majority of all formal jobs in developing countries, they often struggle to obtain the financing they need to grow. Indeed, access to finance remains one of the top five obstacles SMEs face in the regions where the European Bank for Reconstruction and Development (EBRD) invests. This raises the question of whether improving SME access to finance can help create additional employment. This Impact Brief draws on data from the recent EBRD, European Investment Bank and World Bank Group (EBRD-EIB-WBG) Enterprise Surveys and from clients of the EBRD’s Advice for Small Businesses (ASB) programme to estimate the impact of access to finance, and related advisory services, on employment. The analysis reveals that creditconstrained firms employ fewer workers than non-credit-constrained firms and that advisory projects, which often have an associated financing component, have a positive impact on firm-level employment, sales and total assets.