What Features Should Have Firms To Be Credited By Banks – The Case Of Kosovo



Business finance depends mainly on the development of the financial market and its instruments in country. To realize the investment and of their development activities firms was not enough internal finances, but they are forced to use external finances. The main form of external finances in developing countries is bank credit. The purpose of this paper is to analyze when firms need to finance investment and other activities are there any differences between firms of different sizes in acquiring bank loans and does structure of their funding sources is different. Consequently research question is: Does firm size impact on access to bank loans? So the main hypothesis to be tested in the paper is: firm size is positively correlated to access to bank loans. To test the hypothesis and to research about a purpose of the paper I used data collected from the survey of 500 firms in Kosovo, which was conducted by Businesses Support Center of Kosovo. The main results of the paper are that there is a positive relationship between firm size and access to bank loans. As larger is the firm as easier access to bank loans. Small firms are more limited in access to bank loans. Consequently, firm size determines the differences in the structure of the sources of finance for firms. Small firms have to rely more on internal finances, and because are more limited access in finances, they should be directed to the family and friends. Also, in order to obtain credit, small firms must provide collateral three times the value of the loan, while medium firms and large will provide for less than half of small firms do. Other factors that affect firms in acquiring loans from banks are trade and services sectors, imports and performance of the firm. The manufacture sector, export, having a written business plan and area where firm operates didn’t find to have significance impact in acquiring loans.

DOI: 10.5901/mjss.2014.v5n19p439

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Mediterranean Journal of Social Sciences ISSN 2039-9340(Print) ISSN 2039-2117(Online)

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