engleski

Prospect of SMS financing in the Republic of Croatia

Small and medium sized companies are very important part of every economy. They are nucleuses of the total economy development. The same is true in the Republic of Croatia. They count to 99, 6% of the total number of companies and they employ 65, 7% of all employees. However, it seems that there are still many potentials in developing that sector. One of the main reasons for the slower development of the SME sector in Croatia is the lack of an appropriate legal and regulatory environment for this type of activity. However, the SME financing system in Croatia is also a problematic one. Probably the most well known sources of SMEs funds are banks. Croatian banks are involved in SME financing from the beginning of 1990s. However, these relations are still too weak. There are many problems out of which the most relevant are: very slow and complicate procedures of loan approvals ; high collateralization of all loans (even to SMEs) ; non-existence of SCORING model for SMEs ; relatively higher interest rates, etc. The second well-known sources of SME financing in developed countries are governmental organizations. They develop different subsidizing programs aiming faster SMEs` development. The third well-known sources of financing SMEs are private venture capital funds. It should be mentioned that there are only few such funds in Croatia with relatively small assets and even smaller number of IPOs. Like in other aspects, there are much potential in developing these institutions and this market. It is to be expected that the importance of SME sector in the whole Croatian economy will grow constantly. Therefore, one can expect more efficient SME oriented banks, and more active governmental organizations and private equity funds.

Small and medium enterprises ; banks ; micro finance institutions ; private equity funds

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