ANALYSIS OF THE IMPACT OF FINANCIAL ENGINEERING TOOLS ON SMALL AND MEDIUM-SIZED BUSINESS IN LITHUANIA

Abstract

Over 98 per cent of all business entities in the EU are SMEs which provide two-thirds of private workplaces and generate more than half of value-added. Moreover, importance of SMEs increases. As prevailing economic conditions worsened situation of SMEs and banks tightened up lending conditions thus aggravating access to funding sources, it was just necessary to develop support for these companies. Therefore, the purpose of this paper was to analyse financial engineering tools for business development in Lithuania established by the EU structural funds (under the program of 2007-2013) and to evaluate its impact on Lithuanian economy as well as on small and medium-sized business. The research evidenced that SMEs have a significant impact on the overall state of Lithuanian economy: they employ the majority of employees (over 70 per cent) and generate a significant part of the value-added (over 50 per cent). The highest obtained correlation coefficients (0.8 and above) were those of the EU structural funds and number of SMEs, GDP and value-added, number of SMEs and GDP, number of SMEs and value-added. This evidences that the EU structural funds have an impact on the number of SMEs, which in turn affects GDP and value-added generated by SMEs.

DOI: http://dx.doi.org/10.5755/j01.em.18.3.5230