Assessing the Innovation-finance Nexus for SMEs: Evidence from the Arab Region (MENA)

SMEs in the Arab region are widely viewed as important for their multiple roles, notably employment creation. Yet, they consistently encounter several constraints such financing, which impede innovation, growth and internationalisation. This paper examines external finance-innovation nexus operating five non-oil countries—Egypt, Jordan, Lebanon, Morocco Tunisia. To achieve this, a probit regression with instrumental variables is applied to firm-level data from World Bank Enterprise Surveys. The primary findings reveal that finance providers more likely be reluctant fund SMEs’ innovation; yet, it thrives finance. accord hypothesis accessibility funds mainstay of innovation. There need develop policies support equity debt capitals innovative SMEs.