Impact of micro-finance assistance for small and medium enterprises on regional socio-economic development

Пышкин А.Н.

doi:10.25136/2409-7802.2024.4.71863

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Finance and Management

Reference:

Pyshkin, A.N. (2024). Impact of micro-finance assistance for small and medium enterprises on regional socio-economic development. Finance and Management, 4, 162–180. https://doi.org/10.25136/2409-7802.2024.4.71863

Impact of micro-finance assistance for small and medium enterprises on regional socio-economic development

Pyshkin Andrey Nikolaevich

ORCID: 0000-0003-2854-3667

Deputy Head of the Department; JSC "RSMB Corporation"

109074, Russia, Moscow, Slavyanskaya pl., 4 building 1

d-rush@ya.ru

DOI:

10.25136/2409-7802.2024.4.71863

EDN:

NAEMIA

Received:

02-10-2024

Published:

05-01-2025

Abstract: An overview of measures of regional disparities is presented, focusing on financial penetration of banking services, levels of household income, unemployment rates, and investments. The role of micro-finance support in fostering small enterprises is examined. A statistical evaluation of the influence of targeted micro-financing on the socio-economic progress of macro-regions, exemplified by federal districts, is conducted. A bibliographical meta-analysis of the contributions of micro-finance to the socio-economic advancement of territories is performed and a regression model for the number of micro-finance aid recipients with the proportion of gross regional product (GRP) investments across federal districts is constructed with correlation analyses executed. The concept of targeted micro-financing for SME is refined, and specific criteria are identified, including: below-market interest rates on microloans, absence of collateral requirements, investment-oriented targeting, focus on startup entrepreneurs and the real economic sector, and positive outcomes for borrowers in terms of economic development. Using official data from the Central Bank of the Russian Federation and the SME, it is revealed that the operations of micro-finance institutions (MFIs) in entrepreneurial financing, both publicly and privately owned, do not entirely align with these criteria. Private MFIs often charge excessively high rates, while public MFIs frequently require collateral and have a limited share of startup entrepreneurs among their clients. A multifaceted (both strong and bidirectional) relationship is observed between the number of micro-finance assistance beneficiaries and indicators of socio-economic territorial development, using federal districts as examples: - an inverse relationship with the share of investments in GRP; - a direct relationship with SME investments in fixed assets. Considering the results of the regression and correlation analyses, a hypothesis is proposed regarding the existence of an intermediary link between SME microfinancing and investments in fixed capital.

Keywords:

Targeted microfinance, small and medium entrepremeurship, social-economic development, regional desparities, financial inequality, share of investmants, recipients, public MFO, GRP, invsments of SME
This article is automatically translated.

Introduction

In the Russian Federation, there are a number of territories with a low level of socio-economic development and an asymmetric level of development of the financial sector and territorial accessibility of banking services (while the analysis of the development of the financial sector is limited by available data on non-credit financial organizations) ^[1]. In particular, there is an increase in the balance between attracting deposits and lending to individuals, which may help expand the potential for financing regional investments; the same researchers note the leadership in financial saturation of banking services in the regions of the Central Federal District (primarily Moscow, Kursk and Moscow regions) and the lag of regions within the North Caucasus Federal District (The Republic of Dagestan and the Republic of Ingushetia) ^[1].

In addition, at the government level in the Russian Federation, in order to ensure advanced development due to the relatively low baseline values of 4 indicators for the three years preceding the selection in 2019 (average per capita monetary incomes of the population; proportion of the population with monetary incomes below the subsistence level; unemployment rate; investments in fixed assets per capita) 10 regions have been selected ^[2], which can generally be described as regions with the lowest level of socio-economic development: Altai Krai, Republic of Adygea, Republic of Altai, Republic of Kalmykia, Republic of Karelia, Republic of Mari El, Republic of Tuva, Chuvash Republic, Kurgan and Pskov regions.

In the period 2020-2024, individual socio-economic development programs were developed and implemented for these regions, which, according to the Accounts Chamber of the Russian Federation, provided these regions with development ahead of the national average. This includes the regions within the North Caucasus Federal District ^[3].

The purpose of this work is to determine the possibility of microfinance for small businesses to influence the socio-economic development of territories, the objectives are to determine the relationship between the development of SMEs and the socio–economic development of territories, to study the experience of microfinance for start-up entrepreneurs and to show the main directions for the development of microfinance support.

Microfinance and socio-economic development.

As an indicator of the low level of socio-economic development of the territory, we can consider the share of overdue loans, for example, small businesses. Indeed, this indicator indirectly indicates the likelihood of entrepreneurs to recoup investments in doing business in a particular region (including taking into account exports of products and services to neighboring regions). The relevant data is published by the Bank of Russia ^[4]: the "antiTOP-10" regions with the largest share of overdue loans to SMEs as a percentage of the outstanding balance as of April 2024 is shown in Table 1.

Table 1. Top 10 regions in terms of overdue credit indebtedness of SMEs, % of the remaining debt (April 2024).

Region	Loan debt, million rubles	Overdue loans, million rubles.	The percentage of overdue debt, %
Karachay-Cherkess Republic	21 649	4 256	19,7
Komi Republic	17 689	3 313	18,7
Orenburg region	82 142	13 893	16,9
Yamalo-Nenets Autonomous District	24 945	3 850	15,4
Republic of Mari El	20 630	2 866	13,9
Oryol region	35 486	4 482	12,6
Kaluga Region	63 398	7 988	12,6
Republic of Dagestan	16 372	1 877	11,5
Astrakhan region	49 694	5 492	11,1
Novgorod region	11 072	995	9,0

Source: compiled by the author according to the data of the Bank of Russia.

The ratio of per capita loan debt to wages shows a slightly different picture (table 2).

Table 2. Top 10 regions with the highest ratio of credit debt to wages (early 2024).

Region	The ratio of per capita loan debt to annual salary at the beginning of 2024, %
Republic of Tyva	149,4
Republic of Kalmykia	133,9
Tyumen region	91,7
Republic of Adygea	91,3
The Udmurt Republic	89,8
Republic of Bashkortostan	84,8
Novosibirsk region	83,3
Krasnodarskiy kray	81,3
Orenburg region	79,1
Altai Republic	79,0

Source: compiled by the author according to RIA Novosti: Rating of Russian regions by the level of creditworthiness of the population [Electronic resource] : https://ria.ru/20240311/zakreditovannost-1931419910.html (accessed 02.10.2024).

The above is only a part of the approaches to determining the imbalances in the level of socio-economic development of territories. Moreover, various approaches to defining the boundaries of such territories are possible, ranging from the micro-level (individual communities, including cross-border ones, not tied to specific administrative units) to the macro-level within the borders of federal districts (for example, the Far Eastern or North Caucasian federal districts) or climatic (Arctic zone, Chernozem region) or urbanized (rural area) zones.

Thus, considering the functioning of financial and economic systems and institutions, it is impossible to ignore the existing inequality in the level of socio-economic development of the regions of the Russian Federation and the territorial features of the economy.

At the same time, the importance of the SME sector for regional development has been repeatedly raised in the works of Russian scientists. Thus, the work ^[5] summarizes the results of research on the positive impact of SMEs on the level of employment, economic diversification, and also shows that each additional percentage of the number of SMEs above the average increases the level of GRP from 0.06 to 0.17%. The issue of the influence of SMEs on the regional socio-economic development of the region in the decomposition to municipalities is comprehensively covered in the monograph of the Vologda Scientific Center of the Russian Academy of Sciences ^[6]. The interrelation of small business development and integral indicators (rating) of socio-economic development of regions and the level of quality of life of the population is shown in the work of N.Z. Zotnikov and O.I. Arlanova ^[7].

We should also mention the work of K.V. Krichansky, M.A. Yurevich and A.V. Fatkin ^[8], who showed the impact of small and medium-sized businesses on the financial and economic development of Russian territories, when SMEs act as a "transmission channel" from improving financial accessibility (measured through deposits and the cumulative index of the region's provision of banking services) to the growth rate of GRP.

E.A. Bobrova ^[9] shows that the development of small and medium-sized businesses in the region contributes to solving a number of social problems (increasing employment, legalizing the shadow economy), innovative development and competition, and the formation of new market niches of regional specialization.

It can be concluded that the view of supporting and developing entrepreneurship as a significant factor in leveling the differentiation of regional socio-economic development is a common place in research.

At the same time, the unavailability of financial resources (or the need for them) dominates among the factors constraining the development of small business ^[10]. Despite the criticism of microfinance for targeting excess profits ^[11] and reducing it to the level of a financial service ^{[12, 13]}, research indicates that microfinance retains its role as a tool for entrepreneurship development ^[14-17], which, along with lending and factoring ^[18-20], is one of the main measures of financial support for entrepreneurs ^{[21, p. 190]}, or targeted microfinance for SMEs. The main views of Russian scientists on the content of targeted microfinance for SMEs (including such connotations as microfinance support, financial support, etc.) are presented in Table 3.

Table 3. Approaches to defining the concept of microfinance support (targeted microfinance) for SMEs.

Author	Definition of the concept	Author's comment – criteria for targeted microfinance
Kutsuri and Kostokova	The purpose of financial support is to "facilitate small businesses' access to financial resources and increase their competitiveness in the market" ^[22] through subsidies, concessional loans and other forms of assistance.	1. Easy access. 2. Preferential rate. 3. The result is an increase in the competitiveness of SME borrowers.
The team of authors ^[23]	Project financing, investment grants and interest rate subsidies… Formation of institutional preferences for poorly protected SMEs.	1. Targeted financing for investment purposes. 2. Preferential rate. 3. The most poorly protected SME entities (non-bank segment of borrowers).
N.V. Sukhorukova	State financial support for small businesses – subsidies, grants, loans, as well as compensation for part of the interest rate on loans ^[24].	1. Preferential rate (the rate is lower than the market rate).
K.Y. Bagratuni	The system of state support for SMEs is the creation of favorable economic and institutional conditions for the development of entrepreneurial initiatives of citizens in the financial and credit sphere, implemented through the provision of state guarantees for loans and joint financing with commercial banks of small enterprises ^[25].	1. Replacement of collateral with state guarantees (under guarantees of state development institutions) = unsecured lending.
Levchenko and Epanchintsev	State support for entrepreneurship is the purposeful creation of economic and legal conditions, incentives for the development of industries, as well as the investment of material and financial resources in it on preferential terms ^[26].	1. Preferential financing conditions. 2. The real sector of the economy.
O.M. Shestoperov	"Meeting the need for financial resources of small enterprises that are unable to use the services of banks" ^[27].	1. Easy access. 2. Non-bank segment of borrowers.
A.A. Payusov et al. ^[21], A.A. Terenichenko ^[28], S.V. Shchurina ^[29], D.D. Vetlugin ^[30]	High rates on bank loans, the requirement of collateral and business experience lead to restrictions on the development of small businesses, and therefore microfinance support comes to the fore.	1. Low rates. 2. Unsecured lending. 3. Easy access (no credit history, lending to start-up entrepreneurs).
N.L. Balamirzoev ^[31]	Provision of financing by microfinance institutions in unforeseen situations, "in which there is a need for additional, unforeseen financial resources"	1. Short review period. 2. Facilitated (crisis) access.
E.V. Plotnikova ^[32]	Simplified provision of financial resources to small businesses based on the principles of payment, short-term, repayment, trust and targeted use	1. Unsecured lending. 2. Targeted nature.
N.S. Koroleva, E.R. Usmanov, A.A. Osipov	Public and private microfinance organizations provide small loans to entrepreneurs to launch or develop their businesses. These loans are crucial for small businesses, allowing them to expand operations, upgrade equipment, or increase working capital ^[33]	1. Public and private nature. 2. Small amounts. 3. Critical importance. 4. Targeted character - business expansion (revenue growth, working capital, investments).

Source: compiled by the author according to the literature.

Summarizing the above approaches, it can be concluded that targeted microfinance for small businesses is defined as the provision of microloans to SMEs for investment purposes at reduced rates and in the absence of collateral based on accelerated consideration of applications from the non-banking segment of borrowers, primarily start-up entrepreneurs and the real sector of the economy, leading to an increase in the competitiveness of borrowers. Then the criteria for distinguishing microfinance support from microfinance in general are: a preferential (below market) rate on microloans, lack of collateral, targeted nature (primarily investment), target groups (focus on start–up entrepreneurs and the real sector of the economy), and results for the borrower (economic development).

In the Russian Federation, according to the Bank of Russia (https://www.cbr.ru/analytics/microfinance/2023 /) in 2023, businesses received 105.4 billion rubles in microloans, 55% of which were issued by state-owned MFIs. At the same time, rates in commercial MFIs started in the range from 12% (for marketplace sellers) to 40% per annum and higher (factoring and overdraft), while in government MFIs the weighted average rate in 2023 was only 6.1% per annum (https://tass.ru/ekonomika/21892925 ).

At the same time, according to the SME Corporation (https://corpmsp.ru/org-infrastruktury-podderzhki/gosudarstvennye-munitsipalnye-mfo/files /) in 2023, state-owned MFIs provided 10% of the volume of microfinance to start-up entrepreneurs and self-employed citizens, while the average operating portfolio, which was not secured by collateral and (or) guarantees from regional guarantee organizations, amounted to 7%.

Thus, observing two segments of entrepreneurial microfinance in the domestic financial and credit system - commercial (private) and non–commercial (public) – it is necessary to state that none of them can fully satisfy the concept of "microfinance support" and the elimination of relevant defects should be included in the main directions of state policy in this area. While fulfilling the preferential rate criterion, state-owned MFIs do not simultaneously provide unsecured microloans "on trust"; commercial MFIs, in turn, provide fast unsecured microloans, but at rates significantly higher than market rates, there is a lack of interest in providing microloans to small businesses ^[34]. The impact of microloans on the economic development of entrepreneurs remains unexplored.

However, taking into account the views of Russian researchers ^{[21, 28]} on microfinance as an effective tool for financial support and development of small businesses and, as a result, socio-economic development of regions, as well as the fact of the long-term existence of state-owned microfinance organizations (established by both regional authorities and municipalities), it can be assumed that Such MFIs have a beneficial impact on the socio-economic development of territories through the transmission channel of entrepreneurship.

Quantitative analysis of the impact of microfinance support on the socio-economic development of territories.

The analysis of the impact of microfinance support on socio-economic development is based on data from the Unified Register of SME Recipients of Support (https://rmsp-pp.nalog.ru /) for MFIs of entrepreneurial finance (https://www.cbr.ru/microfinance/registry /), which by virtue of the law relate to the infrastructure of support for SMEs.

The analysis is carried out at the meso level, in the context of federal districts. First, it allows you to eliminate gaps in data about support recipients. Secondly, this approach allows us to take into account climatic and geographical features, as well as the structure of the regional economy caused by them. Thirdly, the approach eliminates cross-regional extremes in absolute indicators of the volume of investments in fixed assets. Finally, the comparison of microfinance support and investments within one year directly reflects the result in the form of direct allocation of preferential financial resources received by entrepreneurs for investments in fixed assets at the time of their receipt.

A simple linear regression model is used.:

(1)

The main reason for the choice of linear regression was the hypothesis laid down in ^[8] about the relationship between the volume of financing and investment in the region. Taking into account the limitations of the available open quantitative data (including the lack of information on the amounts of microfinance provided in the territorial context), the exogenous variable is the number of SMEs receiving microfinance, the dependent variable is the share of investments in GRP; all data were used for 2022 (Table 4).

Table 4. Initial data as of 31.12.2022.

Federal District	Number of support recipients	Share of investments in GRP, %
Far Eastern Federal District	2 162	29,8
Volga Federal District	4 985	19,4
North-Western Federal District	2 705	14,2
North Caucasus Federal District	776	27,8
Siberian Federal District	2 538	22,1
Ural Federal District	2 169	20,4
The Central Federal District	4 084	20,2
Southern Federal District	3 178	19,5

Source: compiled by the author according to data from Rosstat and the Federal Tax Service of Russia.

Chart 1. Distribution of the number of recipients of support and the share of investments in GRP by federal districts, 2022

Source: compiled by the author according to Table 4.

Chart 2. The ratio between the number of recipients of support and the share of investments in GRP by federal districts, 2022.

Source: compiled by the author according to Table 4.

Table 5. Investments of SMEs in fixed assets in terms of new and imported fixed assets in 2020.

Federal District	Investment volume, thousand rubles.	As a percentage of the total
Far Eastern Federal District	172 203 552	6,86 %
Volga Federal District	473 420 517	18,85 %
North-Western Federal District	309 414 665	12,32 %
North Caucasus Federal District	84 746 168	3,37 %
Siberian Federal District	215 631 200	8,59 %
Ural Federal District	159 969 660	6,37 %
The Central Federal District For reference: Moscow	900 644 335 423 681 401	35,86 % 16,87 %
Southern Federal District	195 319 092	7,78 %

Source: compiled by the author according to Rosstat (https://rosstat.gov.ru/small_business_2020 ).

Chart 3. Distribution of the number of recipients of support (2022) and investments of SMEs by federal districts, 2020

Source: compiled by the author according to Tables 4 and 5 (for the Central Federal District – without Moscow).

Figure 4. The ratio between the number of recipients of support (2022) and SME investments by federal districts, 2020.

Source: compiled by the author according to Tables 4 and 5 (for the Central Federal District – without Moscow).

Table 6 shows the results of the calculation of regression coefficients (1), correlation indicators, and the results of the White test for heteroscedasticity relative to the data presented in Tables 4 and 5.

Table 6. Values of regression, correlation and White's test indicators between the number of microfinance support recipients (2022) and the share of investments in GRP (2022) and SME investments (2020), significance level = 0.05.

Block	Indicator	Shares of investments in GRP	The volume of investments of SMEs
General	n	8
	m	1
	k	7
Regression	α	-0,00207	104 073,26096
	β	27,51606	-33 009 461,24361
	R2	0,28477	0,83534
	F-value significance (p-value)	2,38891 0,17315	30,43795 0,00149
	F-critical	5,98738	5,98738
Correlation	Pearson correlation coefficient	-0,53364	0,91397
Correlation	Spearman Correlation Coefficient	-0,78571	0,88095
White's Test	F-value	0,40730	0,58587
White's Test	p-value	0,68568	0,59075

Source: the author's calculation based on Tables 4 and 5.

Discussion of the results obtained

The calculated (Table 6) and actual (tables 4, 5, diagrams 1-4) data indicate the absence of heterogeneity and the satisfactory significance of the regression equations (in the case of the absolute value of investments of SMEs, extremely strong), as well as a complex (strong, but multidirectional) correlation between the number of recipients of microfinance support, investments of subjects SMEs and the share of investments in GRP. It is impossible to categorically put forward the thesis outlined by many researchers about the direct impact of microfinance as microcredit on the development of SMEs and through it on the socio-economic recovery of regions – quantitative data indicate the existence of an intermediate element between targeted microfinance for SMEs and the socio-economic development of territories.

For example, the North Caucasus Federal District, with the lowest absolute value of investments in fixed assets among all federal districts, ranks second in terms of the relative share of investments in GRP, which is explained by the extremely small size of the economies in this macro-region. On the other hand, it is obvious that each additional recipient of microfinance support will not lead to an increase in investments by SMEs in the territories of the North Caucasus Federal District by more than 100 million rubles.

It is also necessary to note the deliberate exclusion of data from the global extremum in Moscow when calculating investments of SMEs in fixed assets, which is smoothed out using a relative indicator (share of investments in GRP): in the absence of recipients of microfinance support, entrepreneurs in this region provided over 16% of the total investments of all small businesses in the country in 2020.

In general, observations and calculations suggest that there is a link between the size of microfinance support and investments in fixed assets in the territorial context. However, despite the significant statistical relationship between microfinance support and investments in the territorial context, the conclusion about the causal nature of this relationship and its direction should be made with due diligence.

It is possible to assume a situation where more prosperous and developed territories, with a larger tax base due to increased investment activity in the region, invest additional funds in micro-crediting entrepreneurs for turnaround purposes. On the other hand, the opposite situation may well occur, when conditionally lagging territories seek to introduce the practices of more advanced reference subjects, including microfinance. Testing these hypotheses requires, firstly, a quantitative assessment of the intermediate channel from monetary volumes of microfinance support to investments in GRP, as well as other approaches to clustering and grouping territories, for example, by the level of industrial production, industry structure, etc.

Conclusion

In the presented work, based on the work of domestic and foreign scientists, a definition of the concept of microfinance support for small businesses and the corresponding criteria for its difference from microfinance in general is proposed, the hypothesis of a link between microfinance support and socio-economic development of territories, measured through the share of investments in GRP, is proposed and tested, a quantitative analysis of this relationship is carried out, prospects for further research are identified..

The practical significance lies in defining the main directions of government policy to address the shortcomings of the existing MFIs system of entrepreneurial financing in the context of government and commercial MFIs, and quantifying the relationship between microfinance support and GRP investments allows for a targeted approach to providing subsidies for the development of MFIs, taking into account the need to target microfinance support for aspiring entrepreneurs.

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32. Plotnikova, E.V., Orekhova, M.S., Kazazov, D.D., Shichiyah, B.Z., Tkacheva, K.N., & Poghosyan, V.G. (2021). Microfinance support for small and medium-sized businesses of the Krasnodar region in the context of apandemic. Journal of Economy and entrepreneurship, 7(132), 739-743. doi:10.34925/EIP.2021.132.7.131
33. Koroleva, N.Sh., Usmanov, E.R., & Osipov A.L. (2024). Government Initiatives to help small businesses: Russia’s experience. Ekonomika i upravlenie: problemy, resheniya, 3(144), 19-24. doi:10.36871/ek.up.p.r.2024.03.08.003
34. Vetlugin, D.D. (2024). Microfinance in Russia: institutional voids and unproductive entrepreneurship. The bulletin of the Far Eastern Federal University. Economics and Management, 1(109), 18-39. doi:10.24866/2311-2271/2024-1/1103

First Peer Review

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Microfinance organizations play an important role in the lending market, providing access to finance to low-income segments of the population and entrepreneurs who cannot get a loan from banks. They offer small amounts of loans at high interest rates, but often these conditions are the only way for small businesses to get the necessary funds to develop their business or personal consumption. However, a high interest rate on loans can lead to problems with the debt burden and deterioration of the financial situation and creditworthiness of borrowers. The high level of socio-economic differentiation of Russian regions is a serious problem for the economic development of the country. Differences in living standards, incomes, infrastructure and social services between regions lead to an uneven distribution of resources and investments, which hinders the development of the economy as a whole. This creates imbalances in the economy and limits opportunities for interregional cooperation. To solve this problem, it is necessary to develop regional development strategies aimed at reducing socio-economic differences between regions and stimulating their economic growth. One of these areas is to ensure the availability of credit for small businesses and self-employed citizens. The presented article is devoted to the prospects of microfinance in the development of entrepreneurship as one of the tools for smoothing the imbalances of socio-economic development. The text of the article does not fully correspond to the title. According to the text, the need for targeting microfinance support is not justified, the category of "targeted" is found only in the conclusion of the article. What is the relationship between microfinance and the level of socio-economic development of regions and the development of entrepreneurial initiative? Why is microfinance considered as a promising source of lending to entrepreneurial initiatives, because currently low-income citizens, not entrepreneurs, resort to the services of microfinance organizations in the first place. Are there any illustrations in Russia of the successful experience of start-up entrepreneurs attracting borrowed resources in microfinance organizations, can they be presented in the article? There are no answers to these questions in the text of the article, but their presence is mandatory. The article highlights sections that meet the requirements of the journal "Finance and Management". In the "Introduction", the author substantiates the importance and relevance of the chosen research direction. At the same time, the "Introduction" does not contain such mandatory elements as the purpose, objectives, object and subject of the study, which requires the addition of the article. The section "Microfinance and socio-economic development" is the key in the article. It contains a justification and illustration with static data of a high level of socio-economic differentiation of the regions of Russia, an analysis of the authors' approaches to defining the categories of financial support for small and medium-sized enterprises, as well as the category of microfinance. The "Conclusion" section includes a brief summary of the research results. The author notes that "Microfinance can be considered as a tool for limited socio-economic development and poverty reduction of individual communities and, more broadly, regions, achieved primarily through the provision of financial resources for business activities." The article looks like a compilation of individual issues of defining the category of "financial support", "microfinance", substantiating significant imbalances in the socio-economic development of regions, however, these individual issues are not united by a common idea, therefore the article does not seem to be holistic. The research uses well-known general scientific methods: analysis, synthesis, comparison, ascent from the abstract to the concrete, logical method, etc. Among the specific methods of economic research, the author applied statistical and coefficient analysis. The chosen research topic is relevant, due to the high differentiation of regions in terms of socio-economic development, the increased attention of the regulator to the activities of microfinance organizations, as well as limited availability of financial resources for small enterprises. The author did not give his own vision of the practical significance of the research, and therefore the text of the article should be supplemented with appropriate wording. The author has not formulated a vision of the scientific novelty of the research, and therefore it is not obvious. The author needs to present the formulation of the increment of scientific knowledge based on the results of the research. It is not substantiated why microfinance is considered as the main source of financial resources for the development of entrepreneurship. This issue seems to be very controversial, since the cost of attracting financial resources in microfinance organizations is very high compared to the banking sector. The style of the article is scientific and meets the requirements of the journal. However, there are typos in the text. For example, "the unavailability of financial resources (or the need for them) for small and medium-sized businesses dominates among the factors constraining business development", or "Despite the specificity of the approach of domestic authors to the concept of "financial support", it is based on concrete examples rather than on the definition of the specified concept", "on the instrument, contributing to poverty reduction." The author uses elements of visualization of the research results - the article contains 2 tables. In table 2, the author examines the approach to defining the category of financial support, however, the examples given relate to financial support for SMEs, which should be clarified in the title of the table, in the table itself and in the text of the article. The bibliography is presented by 21 sources, which meets the requirements of the journal. The article contains a sufficient number of references to relevant domestic research on the definition of microfinance and financial support for SMEs. The design of the list of references should be worked on to ensure its compliance with the requirements of the journal. The advantages of the article include the relevance and significance of the chosen research area. The disadvantages of the article include the following. Firstly, the need to supplement the "Introduction" with such elements as the purpose and objectives of the study. Secondly, the lack of formulations of scientific novelty and practical significance. Thirdly, the lack of a logical relationship between the sections of the article and the justification of microfinance opportunities in reducing regional development disparities. Fourth, the need to adjust the title of the study. Fifth, the lack of a single idea in the study. The author needs to justify why microfinance is considered as the main source of financial resources for the development of entrepreneurship. Conclusion. The presented article is devoted to the prospects of microfinance in the development of entrepreneurship as one of the tools for smoothing the imbalances of socio-economic development. The article reflects the results of the author's research and may arouse the interest of the readership. The article can be recommended for publication in the journal "Finance and Management" only if the comments indicated in the text of this review are eliminated.

Second Peer Review

The subject of the study. Taking into account the generated title, the article should be devoted to microfinance support for small (medium-sized) businesses as a factor in the socio-economic development of regions. The article does not contradict the stated topic. The research methodology is based on the analysis, synthesis and grouping of data. It is valuable that specific numerical values are used in the study, but there is no quantitative justification for the link between microfinance support for SMEs and socio-economic development of regions stated in the title. It would be advisable to build a mathematical model to substantiate this thesis. It would also be interesting to show the specifics for different regions: what are the similarities and differences? The relevance of the study of issues related to microfinance support for small (medium-sized) businesses is beyond doubt. Issues related to the development of entrepreneurial activity meet the national development goals of the Russian Federation for the period up to 2030. Therefore, there is a demand for high-quality scientific research on this topic from the potential readership. Scientific novelty was not found in the material submitted for review, but revision of the comments indicated in the text of the review should solve this problem. Style, structure, content. The style of presentation is scientific. The structure of the article was indicated by the author, but it did not allow the author to reveal the stated topic. To solve this problem through the structure, it is recommended to add a section "Discussion of the results obtained". Moreover, it is important to strengthen the argumentation of the theses in the content, including in the context of the stated title. Attention should also be paid to the table reflecting approaches to the definition of the concept of "financial support for SMEs": it would be good to rearrange it into a comparison based on several criteria, otherwise in the current version the presentation of the material looks like a statement, not an analytical one. The thesis stated in the conclusion that "the study shows that, in general, microfinance for small businesses can be considered as one of the tools for regional socio-economic development and poverty reduction" was not justified. Moreover, poverty is mentioned only in the context of the analysis of other publications. It is important to show the relationship between the dynamics/volume of microfinance support for SMEs and poverty: it seems possible to do this through a mathematical model. Bibliography. The bibliographic list consists of 32 titles. It is valuable, it contains both domestic and foreign scientific publications. If possible, as part of the revision, it would also be advisable to supplement it with several scientific publications published in 2024 in order to reflect the current trend in scientific thought on the issue under consideration. The topic is in high demand, therefore it is actively considered in scientific publications. Appeal to opponents. Despite the generated list of publications and the presence of references in the text, no scientific discussion was given. When finalizing the article, it is also important to discuss the results obtained with those reflected in existing scientific publications. It will be advantageous to answer the question: "What is the increase in scientific knowledge?" Conclusions, the interest of the readership. Taking into account the above, the article requires revision, after which it can be published in case of successful re-review. To ensure high interest of the potential readership, it is important to take a qualitative approach to correcting the content of a scientific article.

Third Peer Review

The subject of the research in the reviewed article is microfinance support for small and medium-sized enterprises as a factor of socio-economic development of the territories of the Russian Federation. The research methodology is based on the generalization of information from scientific publications on the topic of the work, analysis of statistical data, visualization of its results. The authors attribute the relevance of the work to the fact that in our country there are territories with a low level of socio-economic development and an asymmetric level of development of the financial sector, as well as territorial accessibility of banking services, and an increase in the balance between attracting deposits and lending to individuals can help expand the financing potential of regional investments. The scientific novelty of the reviewed study consists in the conclusions that microfinance for small businesses can have an impact on the socio-economic development of territories, in identifying the relationship between the development of small and medium-sized businesses and the socio-economic development of territories, between the size of microfinance support and investments in fixed assets in a territorial context, in generalizing the experience of microfinance for start-up entrepreneurs and defining the main directions for the development of microfinance support. The following sections are structurally highlighted in the text: Introduction, Microfinance and socio-economic development, Quantitative analysis of the impact of microfinance support on the socio-economic development of territories, Discussion of the results obtained, Conclusion and Bibliography. The article highlights various definitions of the concept of microfinance support (targeted microfinance) for small and medium-sized businesses; it is noted that targeted microfinance for small businesses in modern literature is defined as providing micro-loans to SMEs for investment purposes at reduced rates and in the absence of collateral based on accelerated consideration of applications from the non-banking segment of borrowers, primarily start-up entrepreneurs and the real sector of the economy, leading to an increase in the competitiveness of borrowers. The publication draws attention to the leadership in financial saturation of banking services in the regions of the Central Federal District (primarily Moscow and the Moscow region) and the lagging regions of the North Caucasus Federal District (the Republic of Dagestan and the Republic of Ingushetia). The authors present the ratings of regions on overdue credit debt of SMEs, as well as the rating of regions in relation to credit debt to wages, correlations between the number of recipients of microfinance support, investments of SMEs and the share of investments in GRP are determined. The bibliographic list includes 31 sources – scientific publications in Russian and English by domestic and foreign scientists on the topic of the article, to which there are targeted links in the text confirming the existence of an appeal to opponents. Among the reserves for improving the publication, the following can be noted: firstly, it is better to do without using the abbreviation "SME" in the title of the article; secondly, the names of the figures should be placed not before them, but after them; thirdly, in diagram 2, the value of the coefficient of determination is so low that it is hardly appropriate to give it in the figure. The subject of the article corresponds to the direction of the journal "Finance and Management", reflects the results of the research conducted by the authors, may arouse interest among readers, and is recommended for publication after some revision in accordance with the comments made.

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Impact of micro-finance assistance for small and medium enterprises on regional socio-economic development