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Access to finance in the Western Balkans

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  • Moder, Isabella
  • Bonifai, Niccolò

Abstract

Limited access to finance is one of the main obstacles for firms located in the Western Balkans and hampers economic growth as well as the transmission of monetary policy. The aim of this paper is to undertake an in-depth analysis of access to finance constraints in this region, where countries as EU candidates or potential candidates have a prospect of joining the European Union. Besides touching upon macroeconomic and banking sector indicators that influence access to finance, this paper empirically assesses firm-level factors that determine whether a firm operating in the Western Balkans is credit-constrained, both in actual and perceived terms. In line with the literature, the results suggest that size, age, location, being audited, having outstanding loans and expectations about future performance matter for actual credit availability. The econometric analysis is complemented by a review of the Western Balkan countries’ Economic Reform Programmes, which indicate that financing constraints are tackled by most national authorities through specific policy measures, mostly for small and medium-sized enterprises. JEL Classification: E22, G30, O16

Suggested Citation

  • Moder, Isabella & Bonifai, Niccolò, 2017. "Access to finance in the Western Balkans," Occasional Paper Series 197, European Central Bank.
    • Handle: RePEc:ecb:ecbops:2017197
    Note: 2769592
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpops/ecb.op197.en.pdf
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    References listed on IDEAS

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    Cited by:

    1. Comunale, Mariarosaria & Geis, André & Gkrintzalis, Ioannis & Moder, Isabella & Polgár, Éva Katalin & Quaglietti, Lucia & Savelin, Li, 2019. "Financial stability assessment for EU candidate countries and potential candidates," Occasional Paper Series 233, European Central Bank.
    2. Tanja Jakimova & Neda Popovska Kamnar, 2019. "Bank financing to SMEs in the Republic of North Macedonia: Evidence from Survey Data," Working Papers 2019-01, National Bank of the Republic of North Macedonia.
    3. Mirgul Nizaeva & Ali Coskun, 2019. "Investigating the Relationship Between Financial Constraint and Growth of SMEs in South Eastern Europe," SAGE Open, , vol. 9(3), pages 21582440198, September.
    4. Zoran Najdanovic & Marijana Ziravac Mladenovic & Natalia Tutek, 2019. "Competitiveness of Business Environment of the Western Balkan Countries," MIC 2019: Managing Geostrategic Issues; Proceedings of the Joint International Conference, Opatija, Croatia, 29 May–1 June 2019,, University of Primorska Press.
    5. Żuk, Piotr & Savelin, Li, 2018. "Real convergence in central, eastern and south-eastern Europe," Occasional Paper Series 212, European Central Bank.

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    More about this item

    Keywords

    economic development; financing constraints; SMEs;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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