The impact of financial and economic crisis on SME's in Greece and Ireland

Abstract

The impact of financial and economic crisis influencing economic development in EU countries is analysed predominately on macroeconomic level. Major part of economic studies analyse the effect of crisis on both real and potential economic growth, unemployment, inflation and debt dynamic. However the effects of the crisis are visible also at microeconomic level. The economic results of businesses are significantly influenced by the negative macroeconomic development at both national and international level. Both decrease in potential growth and purchasing power due to economic recession and more restrictive fiscal policy have a direct impact on aggregate demand and thus the microeconomic sector as whole. Additional source of problems is connected with banking sector crisis and the access to financing mainly for small and medium-sized enterprises (SME’s). The aim of the paper is to fill the gap in economic research and to analyse the impact of the ongoing crisis on business entities in selected eurozone member countries. Authors selected two eurozone member countries from EU periphery (Greece and Ireland). Both countries are severely hit by economic crisis and authors suppose that also their business sector will be significantly influenced. However author believes that the structural differences will lead over the time in faster recovery of Irish businesses in contrast to the Greek one.We create dataset using Amadeus database which contains the harmonized data about statistically significant set of business in selected countries. Authors then sorting the data according selected variables such as size of the company, NACE categorization and comparative indicators of individual business economic performance, namely representatives of indicators groups profitability, solvency, liquidity and indebtedness/financial structure of business entities. For the purpose of analysis authors analyse the data series three years before the crisis (2005, 2006 and 2007) and the three years of crisis (2008, 2009 and 2010). The dataset consists of 3,567 business entities in both observed countries. In the study we use the cluster analysis to detect some basic patterns and trends in business sector in terms of homogeneity within dataset. Based on the results of microeconomic environment analysis (impact of crisis and national economic policies) authors assess the optimal reaction of economic policy (both national and EU) to improve the condition of businesses which authors believe are the source of future economic recovery.

Examining the determinants and consequences of financial constraints faced by Micro, Small and Medium Enterprises' owners

“…In a similar context, Vargo and Seville (2011) elucidated that economic and fiscal disruptions tend to create a financially constrained atmosphere for MSMEs. Even in the pre-Covid business environment, MSMEs were found prone to suffer through capital constraints as compared to large enterprises and corporate entities (Lacina and Vav rina, 2013). In empirical surveys, scholars have confirmed that the intensity of financial obstacles such as insufficient seed capital, inflated interest rates on external credit, elevated insurance costs, expensive carriage charges, training and recruitment costs, reduced sales turnover, high promotional costs, increased bad debts and heavy taxation liabilities threaten the regularity of MSMEs (Edmister, 1972;Pettit and Singer, 1985;Huang and Brown, 1999;Lownes-Jackson et al, 2003;Veskaisri et al, 2007;Naidu and Chand, 2012).…”

COVID-19 and Movement Control Order (MCO) in Malaysia: Access to Financial and Social Capital for Microenterprise Sustainability

“…The challenges faced by MSMEs have urged the government to take imperative action to aid the businesses to survive the challenges brought by the COVID-19 pandemic. Even in the pre-COVID business environment, MSMEs were found prone to suffer capital constraints as compared to large enterprises and corporate entities (Lacina & Vavřina, 2013). Thus, the Malaysian government has announced business supports and assistance in the form of the stimulus package to cushion the economic fallout and these packages can be categorized into two; Economic Stimulus Package Prihatin Rakyat (PRIHATIN) and PRIHATIN PLUS (Mustapa & Mohamad, 2021).…”

Factors Influencing Innovation in Small and Medium Enterprises in the Czech Republic

“…The capacity alone is not enough to bring favorable results. Since they play a vital role in any national economy, this potential should be well developed and constantly nurtured by means of direct and indirect state support (Lacina and Vavřina, 2013).…”