ANALYSES OF FINANCIAL OBSTACLES FACING SME-S: EVIDENCE FROM ALBANIA
Keywords:
Financial access, SME-s, Ordered ProbitAbstract
This paper focuses on the analyses of financial obstacles facing small and medium enterprises in Albania. Using data from 2019 Enterprise Surveys (ES) we try to give answers to questions related to financial patterns that characterise Albanian enterprises. The survey was a shared project of the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank Group (WBG), the data are collected in Albania between January and May 2019. The objective of the ES is to contribute the understanding of what firms experience in the private sector. Collected data are based on firms‘ experiences and enterprises‘ perception of the environment in which they operate.
The data are stratified in three levels for Albania: industry, establishment size, and region. Industry stratification was completed as follows: Manufacturing – combining all the relevant activities, Retail, and Other Services. Moreover, 2019 Albanian ES was based on the following size stratification: small (5 to 19 employees), medium (20 to 99 employees), and large (100 or more employees). Regional stratification was done across three regions: Northern Albania comprising Dibër, Durrës, Kukës, Lezhë, Shkodër, Central Albania comprising Tirana and Elbasan, and Southern Albania comprising Berat, Fier, Gjirokastër, Korçë, and Vlorë.
According to the theory, enterprise performance can be hindered by many factors, including lack of finance, corruption, and legal instability. However, one of the most important obstacles to enterprise growth in developing countries seems to be the lack to access to finance. Therefore, it is substantial to further investigate on financial obstacles and factors that contribute to these challenges faced by Albanian enterprises.
To analyse financial obstacles and factors affecting on them we estimate the Ordered Probit model where the dependent variable corresponds to the survey question: ―How much of an obstacle: access to finance?‖. While the vector of independent variables is composed by enterprise characteristics such as firm size, ownership structure, legal status, region, etc. Moreover, dummy variables are used to capture firm‘s technological capability, and gender ownership.
Empirical results show that financial obstacles tend to be more significant for smaller enterprises, operating not in the central area of the country, and female ownership means more challenges in the financial markets. Additionally, lack of financial challenges has a steadily constructive impact on the productivity of SME-s.
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