Rudra Prakash Pradhan (p), Mahendhiran S Nair, Sara E Bennett, John H Hall, Sahar Bahmani

Filippo Di Pietro

Regional economies seek to promote growth through financial integration and literature suggests that developing the financial system, integrating the financial system within a sound institutional framework can promote economic growth (Pradhan et al., 2023, 2020). This study fills the gap by examining the impact of institutional quality on financial development-regional financial integration-economic growth nexus on BRICs. This study assesses whether regional financial integration and financial development have a stronger effect on the economic growth of BRICs that have high level of institutional quality than it does in countries with lower level.
In this paper, we examine the Granger causal relationships between financial integration and financial development, institutional quality, and economic growth in the BRICs over the period 1980-2022. Using principal component analysis for the construction of the financial development and institutional quality indices, and a panel vector auto-regressive (P-VAR) model for testing Granger causalities, the study finds the presence of both unidirectional and bidirectional causal links between the variables. Our investigation leads to a better understanding of interrelationships between the variables, both in the short run and long run. Based on the empirical findings, the study will examine the role of institutional quality in enhancing regional financial integration, financial development and long-run economic growth in the BRICs. The study finds strong endogenous relationships between these variables in the short-run and long-run. Hence, policy-makers in these countries should give careful attention on co-development policies and strategies pertaining to institutional quality, financial integration, financial development and the sustainable economic growth. Lessons from the BRICs case study may be valuable for policy-makers from other economic groups/regions, who are designing policies and strategies to enhance institutional quality, regional financial integration, financial development, and sustainable economic growth.
Keywords: Institutional quality, regional financial integration, financial development,, economic growth, P-VAR, BRICs

Marika Gruber (p), Daniel Rauhut

Rudra Prakash Pradhan

Background. An alternative to being employed is to be an entrepreneur, both for natives as for immigrants. In remote, peripheral, and mountainous areas far away from the main population centres, this is especially so. For immigrants, self-employment and entrepreneurship appear closely related to the failure of establishing themselves on the labour markets. Although self-employment is a common strategy among immigrants to avoid unemployment, the level of immigrant entrepreneurship is low in many of the places beyond the European cities. However, as the knowledge about rural immigrant entrepreneurship is also low, this paper addresses this literature gap and contributes to the European Commission’s aim to foster migrant entrepreneurship.

Aim and questions. This paper discusses how policies, both in terms of design as well as content, try to stimulate (or prevent) immigrant entrepreneurship beyond the major population centres in Austria and Sweden and how they go along with EU policies such as the EU “Entrepreneurship 2020 Action Plan” or the EU “Action plan on the integration of third country nationals”. A special focus is given on policies implemented since the big refugee immigration from Afghanistan and Arab countries in 2015 and afterwards as well as the newer immigration of Ukrainian displaced persons.

Data and methodological considerations. This paper is based on a literature review of implemented policies in a multilevel governance system and existing interdisciplinary research findings. The analysis is conducted by using a structured observation system; the material is coded following an iterative, grounded theory approach.
In this paper, we define “beyond the cities” are areas not in the vicinity of cities, metropolitan areas, and urban agglomerations with ≥250,000 inhabitants. Particular attention is paid to rural areas with low population density. As immigrants are non-EU citizens defined.

Findings. The findings in Sweden imply that Sweden has not tried to stimulate immigrant entrepreneurship in general. Unemployed immigrants are encouraged to start small businesses in labour intensive and low-productive sectors, especially so in areas beyond the cities. The rationale for the public authorities appears to reduce the unemployment rate for immigrants, not to stimulate the entrepreneurship. The results for Austria show that entrepreneurs and business start-ups are politically supported and that there is a large number of institutionalised initiatives available. However, the majority of information is primarily available in urban areas. In addition, many migrants rely on their informal, ethnic networks to inform about starting a business, which often provide only semi-correct information.

Manuel Vega-Pascual (p), Filippo di Pietro (p), Maria-José Palacín-Sanchez, Rafaela Alfalla-Luque

Marika Gruber

This study analyses the effect of the financial ecosystem on the growth of young firms at a regional level. This subject is relatively innovative in entrepreneurial finance research, since the majority of the studies carried out have failed to take into account all the alternative sources of external financing to which young firms have access. This study highlights the relevance of other alternative resources and actors in the financial environment beyond traditional banks, such as crowdfunding, business angels, peer to peer lending, accelerators, incubators, or venture capital Specifically, our research incorporates a proxy of the development of the financial ecosystem based on survey data from the Global Entrepreneurship Monitor (GEM). Moreover, our investigation uses a sample of young small and medium-sized enterprises (SMEs) representing every Spanish region between the years 2008-2015. The empirical analysis applies panel data methodology. The results show that the growth of young enterprises depends on the development of a regional financial ecosystem, evidencing that better access to external finance favours the growth of young firms. This relation is even more relevant among early-stage firms, suggesting the moderating effect of firm age on the relationship between the regional financial ecosystem and the growth of young SMEs