engleski

SME Finance: The Case of Croatia

On their demanding path to competitive market economies, transition economies are trying to catch up with more developed and experienced countries promoting, among other things, SME development. The aim of this paper is to examine the SME approach to finance necessary for establishment and growth. We start with present approaches in literature on SME finance and then offer the review of SME’ s finance in Croatia. One of the areas frequently perceived as detrimental for SMEs is access to appropriate sources and amount of finance. The reasons for difficulties SMEs face while ensuring external finance in appropriate amount and/or competitive terms, embrace issues such as higher uncertainty and imperfect information, lack of collateral and personal equity. In addition, entrepreneurs may find high interest rates and bank charges as an important barrier for entry and expansion. Croatian SMEs participate in 99.4 percent of all business activity with an employment share of 64.6 percent. Government has recognized the importance of SME as a contributor to the developing market economy, overall competitiveness, and employment improvement. In an effort to foster SME, Croatia has enacted appropriate laws. Additionally, it has adopted a Program for SME development and created a base for a broad supportive framework. However, in real life there is room for further improvement and application of best practice.

SME; finance; development

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