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What determines the allowance of bank loans for investment – an overview of Kosovo SMEs

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  • Florin Peci

    (Faculty of Business Administration, University of Peja)

Abstract

The present study determines firm and entrepreneurship characteristics of small and medium enterprises (SMEs) active in international trade towards investment and growth. Using data collected through self-administered interviews with 180 SMEs in Kosovo, we investigated factors that influence the investment growth financed by bank loans. Econometric model of linear regression indicates that a large number of firm and entrepreneur characteristics including experience, sector, business plan, audit statements, collateral significantly affect investment growth. Our findings suggest that especially education of SMEs managers have higher rate of financing sources through bank loan. The study concludes with respective findings translated into recommendations, which have to be considered by relevant stakeholders active in entrepreneurship and policymaking.

Suggested Citation

  • Florin Peci, 2015. "What determines the allowance of bank loans for investment – an overview of Kosovo SMEs," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 1(1), pages 27-35, April.
    • Handle: RePEc:mgs:ijoied:v:1:y:2015:i:1:p:27-35
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    References listed on IDEAS

    as
    1. John Rand, 2007. "‘Credit Constraints and Determinants of the Cost of Capital in Vietnamese Manufacturing’," Small Business Economics, Springer, vol. 29(1), pages 1-13, June.
    2. World Bank, 2010. "Kosovo - Unlocking Growth Potential : Strategies, Policies, Actions - A Country Economic Memorandum," World Bank Publications - Reports 2859, The World Bank Group.
    3. Zhang, Guibin, 2008. "The choice of formal or informal finance: Evidence from Chengdu, China," China Economic Review, Elsevier, vol. 19(4), pages 659-678, December.
    4. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    5. Charles Ou & George Haynes, 2006. "Acquisition of Additional Equity Capital by Small Firms – Findings from the National Survey of Small Business Finances," Small Business Economics, Springer, vol. 27(2), pages 157-168, October.
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    More about this item

    Keywords

    Bank loans; investments; SMEs; international trade; Kosovo;
    All these keywords.

    JEL classification:

    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General

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