Sources of financing for small and medium enterprises: evidence from Ukraine, Poland, and Germany.

The relevance of the topic of this work is that small business is of great importance in accelerating the formation of market relations, plays an important stabilizing role in both the economic and social spheres, which is especially important for our country and in the process of establishing a market economy. The dynamic development of small and medium enterprises contributes to a more rapid structural transformation of the economy in these countries, transfer of redundant labor frоm the transformed enterprises and sectors to the sector of small and medium enterprises, increase entrepreneurial activity, improve the quality of the workforce, create new jobs and improve socio-economic stability in society. The main positive aspect of small business is the high motivation of the owner to work, to develop the enterprise, to increase its competitiveness, because those who do not have an interest in property do not have an interest in effective work. Small business entities are simply obliged to work effectively, as they constantly bear full economic and social responsibility for the final results of business and are forced to survive in a tough competition. To ensure effective operation, small businesses, in turn, need freedom of choice and decision-making, guarantees of contracts and agreements, and absolute security of private property, which can only be provided by state policy in the field of legislation and taxation of small businesses and private businesses. In all countries, the state contributes to the growth of the small and medium-sized enterprise sector by implementing special economic policies aimed at its support and development. The tools of such a policy can be very different, frоm fiscal to informational. A set of measures – administrative, legislative, tax and other-is important in supporting small and medium-sized enterprises. A special place here is occupied by financial assistance measures that can involve specialized institutions of different levels – both large state banks and the system of regional banks-in the process of supporting this business. From the point of view of the development of the financial services market for small businesses, the following characteristics of the banking system are of particular importance: - availability of banking services and free choice of Bank by clients; - expanding forms and improving the quality of banking services; - improving the reliability of banks.

. The objective of this thesis: - To describe SME sector, its importance and influence on modern economics - To view the development of SME sector around the world on examples of some countries like the USA, Japan, Europe - To study different theories, approaches of SMEs - To see what are the complications which prevent SME sector frоm its development and its growth - In practical part I put as an example SME sector in Germany, Poland, the Ukraine where I could describe and study closer the advantage and disadvantages of growth, developments, what can be done in future for this sector in those countries. The work consists of 3 chapters, the third chapter is the practical one where on definite examples I could make important calculations and conclusions. For this work I used foreign literature, but mainly Russian and Ukrainian, also official information was taken frоm original sources, which are indicated in literature part,

The basis of the mechanism of econometric modeling is the econometric model. The economic object in this model is described and studied using empirical (statistical) data. The econometric model takes into account the real conditions of the object's existence and does not contradict the General laws of Economics. The prediction error for this model does not exceed the specified value. General view of the econometric model Y = f (X) + ε Y – the observed value of the dependent variable (explained variable, result) F (X) - the explained part that depends on the value of the explanatory variables (factors) ε-random component (error) Classification of econometric models There are three main classes of models that are used for analyzing and predicting economic systems · time series models; * regression models with a single equation; * systems of simultaneous equations. Ø time series Models Time series models are models of the dependence of the effective attribute on time. These include · growth curve models (trend models), * adaptive models, * autoregression and moving average models. Model examples: 1. Models describing time dependence: - trend - seasonality - seasonal trend 2. Models representing the dependence of the result on variables, Dated at other times: - with distributed lag Using these models, you can solve problems of forecasting sales volume, demand for products, short-term forecast of interest rates, etc. The following goals of ECONOMETRIC MODELING are distinguished: forecast of economic and socio-economic indicators that characterize the state and development of the analyzed system; simulation of possible scenarios of socio-economic development of the system to identify how the planned changes in certain manageable parameters will affect the output characteristics. MAIN STAGES OF ECONOMETRIC MODELING: Statement - definition of the final goals of the model, a set of participating factor (input) and effective (output) features. A priori-qualitative (theoretical) analysis of the essence of the phenomenon under study. Formation and formalization of a priori information related to the nature of initial statistical data and random components. Parameterization is the actual modeling, i.e. the choice of the General type of the model, the composition and form of its connections. For each equation, the composition of variables and the relationships between them are determined. Informational collection of necessary statistical information, analysis of its quality (reliability of information); Identification – statistical analysis of the model, primarily statistical estimation of unknown parameters of the model. Verification – comparison of real and model data, assessment of model quality (i.e. assessment of its adequacy and reliability). If the quality of the model does not suit the researcher, then go to the 2nd stage. When building an econometric model, the following types of DATA are used: 1) a priori information - information about the nature and content of the analyzed phenomenon, presented in the form of certain theoretical laws, restrictions, hypotheses. 2) initial statistical data. There are two main types of statistics: - spatial data (cross-sectional data); - temporary data (time-series data). In any econometric model, all participating VARIABLES are divided into: Exogenous (independent) – values that are set "frоm outside", independently, to a certain extent they are managed (planned) (x); Endogenous (dependent) - values that are defined within the model, or interdependent (y). Lag-exogenous or endogenous variables of the econometric model that are dated to previous moments in time and are in the equation with the current variables. For example: yt is the current endogenous variable, yt-1-lag endogenous variable, yt-2 is also a lag endogenous variable, XT-1-lag exogenous variable. Predefined variables (explanatory variables). These include lag and current exogenous variables (xt, xt-1), as well as lag endogenous variables (yt-1). Any econometric model is designed to explain the values of current endogenous variables (one or more) depending on the values of predefined variables. Therefore, current endogenous variables are also called explicable, and predefined variables are called explanatory. In the most General form, the German model is characterized by the following specific features: individual freedom as a fundamental condition for decentralized decision-making and effective functioning of the market mechanism (a very significant role is played by an active state policy to maintain competition); social equality, which implies that if the market distribution of income is determined by the volume of investment or various individual efforts, the achievement of relative equality requires an active social policy. Thus, the German model of economy is characterized by a fairly powerful social policy, which is based on the search for a compromise between groups with, we can say, opposite interests, as well as on the active and direct participation of the state in the provision of social benefits (for example, in the field of housing construction); every possible incentive to organizational and technological innovation; counter-cyclical regulation; effective structural policy; comprehensive promotion and protection of competition. Industry and banking The so-called "Rhenish capitalism" is the next important feature of the German economic model. We are talking about a very significant role of banks in the country's economic system. Moreover, in Germany, banks are shareholders of the largest industrial companies. This explains the reasons for active intervention of banks in the process of making various business decisions. Thus, in the German economy, the position of banks in the context of their real impact on business and the country's economy as a whole is much stronger than in other countries. When assessing the development of the German economy, it is necessary to take into account such an important economic component as GDP (gross domestic product). It is characterized by the total cost of goods and services that were produced in the country during the reporting period. In 2019, the total GDP of Germany exceeded 4039 billion US dollars, in 2018-3998 billion us dollars. The annual growth rate was 0.39%. Thanks to constant economic growth, the infrastructure and social sphere are developing well, which is very favorable for investment by investors, despite the fact that the lion's share of GDP is taken by the provision of services (more than 79 %), and industry is in second place (about 19%). German GDP 2019 by individual items If you make a breakdown by sector of the German economy, the GDP in 2019 was: agriculture — 7,101 billion US dollars; construction — 55.118 billion; services in the public sector — 173,360 billion; production — 185.663 billion US dollars. If the total volume of GDP is divided by the population of the state, then the calculation of GDP per capita will be made, showing how many goods and services are accounted for in the country per inhabitant. In 2019, in Germany, this figure was 47,500 us dollars. According to this indicator, Germany is in the top twenty world States. Against the background of stable economic growth, benefits for the unemployed, refugees, and single mothers increased in 2019. By the end of 2019, Germany has become the leader in terms of GDP due to the automotive, mechanical engineering, chemical industry and telecommunications. Along with the United States and China, Germany has become the leader in the top three exporting countries. According to the German Council of economic experts, the most likely scenario is that Germany's GDP will fall by 2.8% in 2020. Experts said that if the quarantine measures last longer than before the beginning of summer, the economy will begin to recover only frоm 2021. Poland is one of the world's leading producers of many industrial goods, both basic raw materials and processed products. Poland also belongs to the group of the world's leading producers of a number of agricultural products. It is the world's largest producer of rye, supplying about one-quarter of the world's production. Poland is one of the top ten producers of oats, potatoes, sugar beets and pigs. Its place in the second ten is provided by the volume of production of barley, wheat, sugar ,meat, cow's milk and chicken eggs. The policy of overcoming the weaknesses of the Polish economy and achieving strategic goals should be based on the effective use of the chances arising frоm membership in the European Union, the creation of favorable macroeconomic conditions through appropriate fiscal and monetary policies, legal regulation, as well as on the correct identification of areas of state intervention in the course of development processes. All the goals and objectives set in this work were studied in detail and achieved.

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