FINANCIAL INTERMEDIATION MECHANISMS AND ECONOMIC GROWTH: PANEL EVIDENCE FROM INDUSTRIALISED COUNTRIES (2007–2025)

Abstract

Purpose:
This study investigates the impact of key financing instruments—factoring, government loan guarantees, commercial loans, and venture capital—on real gross domestic product (RGDP) in industrialized countries over the period 2007–2025.

Design/Methodology/Approach:
The research employs panel data regression techniques to analyze the long-term relationships between selected financing instruments and economic growth. A sample of industrialized economies is examined using econometric models that capture elasticity effects and assess the contribution of each financing mechanism to RGDP.

Findings:
The empirical results indicate that commercial bank loans and venture capital have the strongest positive effects on economic growth, with long-term elasticities of 0.71 and 0.65, respectively. Factoring and government loan guarantees also make significant positive contributions, with elasticities of 0.38 and 0.44, respectively. Furthermore, the combined use of these financing instruments within an integrated policy framework enhances growth effectiveness, leading to an estimated long-term increase in RGDP of approximately 25%.

Value/Originality:
This study provides a comprehensive comparative analysis of multiple financing instruments within a unified empirical framework, highlighting their differential and complementary roles in promoting economic growth. It contributes to the literature by offering updated evidence for the period 2007–2025 and by emphasizing the importance of coordinated financial policies. The findings offer practical implications for policymakers in designing efficient financing strategies to foster sustainable economic development in industrialized economies.