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The impact of access to finance and institutional barriers on SMEs' performance: difference between the formal and informal sector

Author

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  • Kujtim Zylfijaj
  • Dimitar Nikoloski

Abstract

This paper explores the impact of access to finance and institutional barriers on small and medium-sized enterprises' (SMEs) sales. For the purpose of this empirical study, two samples were used for both formal and informal SMEs in Kosovo. The sample of formal SMEs consists of 1,000 businesses, while the sample of informal SMEs consists of 250 businesses. The logit models were employed to find out the impact of access to finance and institutional barriers on SMEs performance in both sectors. Findings indicate that access to finance and institutions affect the performance of SMEs in the formal and informal sector. Furthermore, findings show that access to finance and institutional barriers affect the performance of formal SMEs more than informal ones. The evidences show that formal SMEs outperform informal ones in terms of sales.

Suggested Citation

  • Kujtim Zylfijaj & Dimitar Nikoloski, 2021. "The impact of access to finance and institutional barriers on SMEs' performance: difference between the formal and informal sector," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 43(4), pages 479-501.
  • Handle: RePEc:ids:ijesbu:v:43:y:2021:i:4:p:479-501
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