BARRIERS TO BANK LOANS AND SMEs EARNINGS: EVIDENCE FROM KOSOVO

Abstract

The purpose of this paper is to investigate the impact of bank loans on financing the business activities of manufacturing SMEs (Small and Medium-sized Enterprises) in Kosovo. Increasing the level of production of these SMEs is vital for a transition economy such as Kosovo. Representatives of Kosovo's 200 SMEs were interviewed regarding loan barriers and financial support from local and EU (European Union) institutions. Kosovo has a limited number of manufacturing SMEs. The random sampling method was used as a sampling method. The data are cross-section. The collected data were analyzed through the probit model. The SPSS (Statistical Product and Service Solutions) program has also been used to derive statistical results. According to the achieved findings, Not consulting an expert and obtaining loans twice within the analyzed period are significant variables. The results confirm the hypotheses that manufacturing SMEs have obstacles in financing their activities through bank lending and collateral is important for facilitating bank lending.