An empirical study on micro, small, and medium enterprises access to finance in Kosovo: A survey based analysis

Ardian Berisha; Arber Hoti; Hamdi Hoti

doi:10.31893/multiscience.2024068

Keywords:

Abstract

This study investigates the access to finance among Micro, Small, and Medium Entities (MSME) in Kosovo, providing an understanding of the financial landscape of this important sector. Utilizing a quantitative research design, the study administered a structured questionnaire to a representative sample of 250 MSME in Kosovo, encompassing a variety of industries and sizes. The questionnaire measured the types of financing used, perceived barriers to accessing finance, and the impacts of financial constraints on the business.Data analysis included descriptive statistics, inferential statistics, and regression analysis. Findings suggest a reliance on internal funds among most MSMEs, with high-interest rates and stringent collateral requirements identified as major barriers to accessing external finance. Moreover, firm size and years of operation appeared to positively influence access to finance. The study concludes with recommendations for regulatory reforms, financial sector development, and capacity building to ease these barriers and enhance MSME growth and competitiveness.Further research is encouraged to probe the effectiveness of different interventions and delve deeper into the experiences of MSMEs in navigating their financial constraints.
References
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31. Pallant, J. (2007). SPSS survival manual, 3rd. In Edition. McGrath Hill.
32. Peci, F., & Shabani, H. (2020). Determinants Of Sme Finance: Lessons From Kosovo. KNOWLEDGE-International Journal, 36(2001).
33. Tavakol, M., & Dennick, R. (2011). Making sense of Cronbach’s alpha. In International journal of medical education (Vol. 2). DOI: https://doi.org/10.5116/ijme.4dfb.8dfd
34. Tmava Q, Peci F, Luboteni G (2013) The Role of Banks in Small and Medium Enterprises Financing: A Case Study from Kosovo. International Journal of Economics and Finance, 5(12). DOI: https://doi.org/10.5539/ijef.v5n12p94
35. World Bank (2015) Global Findex Database. In Retrieved April 2015 from http://www.worldbank.org/en/programs/globalfindex.
36. Waari DN, & Mwangi WM (2015) Factors influencing access to finance by micro, small and medium enterprises in Meru County, Kenya. International Journal of Economics, Commerce and Management, 3(4), 1-15.
37. Zidana R (2015) Small and medium enterprise (SMEs) financing and economic growth in Malawi: Measuring the impact between 1981 and 2014. Journal of Statistics Research and Reviews, 1(1).

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

How to cite

Berisha, A., Hoti, A., & Hoti, H. (2023). An empirical study on micro, small, and medium enterprises access to finance in Kosovo: A survey based analysis. Multidisciplinary Science Journal, 6(5), 2024068. https://doi.org/10.31893/multiscience.2024068

[1] Ayyagari M, Beck T, Demirguc-Kunt A (2007) Small and medium enterprises across the globe. Small Business Economics, 29(4).

[2] Ayyagari M, Demirgüç-Kunt A, Maksimovic V (2008) How important are financing constraints? The role of finance in the business environment. World Bank Economic Review, 22(3).

[3] Ayyagari M, Demirgüç-Kunt A, Maksimovic V (2011) Firm innovation in emerging markets: The role of finance, governance, and competition. Journal of Financial and Quantitative Analysis, 46(6). DOI: https://doi.org/10.1017/S0022109011000378

[4] Beck T (2007) Financing Constraints of SMEs in Developing Countries : Evidence , Determinants and Solutions. Financing Innovation-Oriented Businesses to Promote Entrepreneurship, April.

[5] Beck T, Demirgüç-Kunt A, Laeven L, Maksimovic V (2006) The determinants of financing obstacles. Journal of International Money and Finance, 25(6).

[6] Beck T, Demirgüç-Kunt A, & Maksimovic V (2005) Financial and legal constraints to growth: Does firm size matter? In Journal of Finance (Vol. 60, Issue 1).

[7] Berger AN, Klapper LF, Udell GF (2001) The ability of banks to lend to informationally opaque small businesses. Journal of Banking and Finance, 25(12). DOI: https://doi.org/10.1016/S0378-4266(01)00189-3

[8] Berger AN, Udell GF (2006) A more complete conceptual framework for SME finance. Journal of Banking and Finance, 30(11). https://doi.org/10.1016/j.jbankfin.2006.05.008

[9] Brown M, Ongena S, Popov A, Yeşin P (2011) Who needs credit and who gets credit in Eastern Europe? Economic Policy, 26(65). DOI: https://doi.org/10.1111/j.1468-0327.2010.00259.x

[10] Bryman A, Clark T, Foster L, Sloan L (2021) Bryman’s Social Research Methods. Oxford.

[11] Creswell JW (2015) A Concise Introduction to Mixed Methods Research. In SAGE Publications, Inc. (Vol. 1999, Issue December).

[12] De Haa R, Ferreira D, Taci A (2010) What determines the composition of banks’ loan portfolios? Evidence from transition countries. Journal of Banking and Finance, 34(2). https://doi.org/10.1016/j.jbankfin.2009.08.005

[13] Demirguc-Kunt A, Klapper L, Singer D, Ansar S, Hess J (2018) The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. In The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. DOI: https://doi.org/10.1596/978-1-4648-1259-0

[14] Fatoki O (2014) The causes of the failure of new small and medium enterprises in South Africa. In Mediterranean Journal of Social Sciences (Vol. 5, Issue 20). DOI: https://doi.org/10.5901/mjss.2014.v5n20p922

[15] Field A (2013) Discovering statistics using IBM SPSS statistics. In Statistics (Vol. 58).

[16] Frank MZ, Goyal VK (2003) Testing the pecking order theory of capital structure. Journal of Financial Economics, 67(2).

[17] Freel M, Carter S, Tagg S, Mason C (2012) The latent demand for bank debt: Characterizing “discouraged borrowers.” Small Business Economics, 38(4). DOI: https://doi.org/10.1007/s11187-010-9283-6

[18] Hashi I, Krasniqi BA (2011) Entrepreneurship and SME growth: Evidence from advanced and laggard transition economies. International Journal of Entrepreneurial Behaviour & Research, 17(5). https://doi.org/10.1108/13552551111158817

[19] Hogan T, Hutson E (2005) Capital structure in new technology-based firms: Evidence from the Irish software sector. Global Finance Journal, 15(3 SPEC. ISS.). DOI: https://doi.org/10.1016/j.gfj.2004.12.001

[20] Krejcie RV, Morgan DW (1970) Determining Sample Size for Research Activities. Educational and Psychological Measurement, 30(3). DOI: https://doi.org/10.1177/001316447003000308

[21] Kushnir K, Mirmulstein ML, Ramalho R (2010) Micro, Small, and Medium Enterprises Around the World: How Many Are There, and What Affects the Count? World Bank, IFC.

[22] Kodongo O (2018) Financial regulations, financial literacy, and financial inclusion: Insights from Kenya. Emerging Markets Finance and Trade, 54(12), 2851-2873. DOI: https://doi.org/10.1080/1540496X.2017.1418318.

[23] Levine R (2005) Chapter 12 Finance and Growth: Theory and Evidence. In Handbook of Economic Growth (Vol. 1, Issue SUPPL. PART A). DOI: https://doi.org/10.1016/S1574-0684(05)01012-9

[24] Bhaird C, Lucey B (2010) Determinants of capital structure in Irish SMEs. Small Business Economics, 35(3). https://doi.org/10.1007/s11187-008-9162-6

[25] Mersland R, Øystein Strøm R (2009) Performance and governance in microfinance institutions. Journal of Banking and Finance, 33(4). DOI: https://doi.org/10.1016/j.jbankfin.2008.11.009

[26] Mudd S (2013) Bank Structure, Relationship Lending and Small Firm Access to Finance: A Cross-Country Investigation. Journal of Financial Services Research, 44(2). https://doi.org/10.1007/s10693-012-0140-4

[27] Myers SC (1984) Finance Theory and Financial Strategy. Interfaces, 14(1). https://doi.org/10.1287/inte.14.1.126

[28] Myers SC, Majluf NS (1984) Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2). https://doi.org/10.1016/0304-405X(84)90023-0

[29] Nure, G. (2021). [Access to Bank Credit and SME Financing. (Case of Kosovo) Paper Title]. SSRN Electronic Journal. DOI: https://doi.org/10.2139/ssrn.3813863

[30] Olawale, F., & Garwe, D. (2010). Obstacles to the growth of new SMEs in South Africa: A principal component analysis approach. African Journal of Business Management, 4(5).

[31] Pallant, J. (2007). SPSS survival manual, 3rd. In Edition. McGrath Hill.

[32] Peci, F., & Shabani, H. (2020). Determinants Of Sme Finance: Lessons From Kosovo. KNOWLEDGE-International Journal, 36(2001).

[33] Tavakol, M., & Dennick, R. (2011). Making sense of Cronbach’s alpha. In International journal of medical education (Vol. 2). DOI: https://doi.org/10.5116/ijme.4dfb.8dfd

[34] Tmava Q, Peci F, Luboteni G (2013) The Role of Banks in Small and Medium Enterprises Financing: A Case Study from Kosovo. International Journal of Economics and Finance, 5(12). DOI: https://doi.org/10.5539/ijef.v5n12p94

[35] World Bank (2015) Global Findex Database. In Retrieved April 2015 from http://www.worldbank.org/en/programs/globalfindex.

[36] Waari DN, & Mwangi WM (2015) Factors influencing access to finance by micro, small and medium enterprises in Meru County, Kenya. International Journal of Economics, Commerce and Management, 3(4), 1-15.

[37] Zidana R (2015) Small and medium enterprise (SMEs) financing and economic growth in Malawi: Measuring the impact between 1981 and 2014. Journal of Statistics Research and Reviews, 1(1).

Abstract

References

How to cite