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Interest Rates, GDP Growth, and SMEs’ Financing Choice : Crowdfunding versus Bank Loans

Tieben, J. (2025) Interest Rates, GDP Growth, and SMEs’ Financing Choice : Crowdfunding versus Bank Loans.

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Abstract:This study examines how SMEs’ financing decisions between bank loans and debt-based crowdfunding are influenced by macroeconomic conditions, particularly GDP growth and interest rates. Using a quantitative survey approach, the responses of 44 SME owners and financial managers were analysed. The results show that rising interest rates significantly increase a firm’s likelihood of choosing debt-based crowdfunding over bank loans, with a switching threshold lying between 5% and 8%. Stable GDP growth, on the other hand, increases the likelihood of choosing bank loans. Furthermore, exposure to these factors is influenced by firm-specific characteristics, especially firm age and size. Smaller and younger enterprises were found to be more likely to change their financing approach from bank loans to lending-based crowdfunding when borrowing rates increase. In contrast, larger and older firms tend to have a higher threshold for such shifts. By showing how SMEs modify financing strategies in response to organisational traits and macroeconomic conditions, these results expand on theories of capital structure, transaction cost, signaling, and agency theory.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
Link to this item:https://purl.utwente.nl/essays/106809
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