Impact of Firm Specific Charachteristics in the Access to External Finances of SMEs

Small and medium-sized enterprises (SMEs) play a key role in the economic development of a country. This study investigates the importance of the small and medium-sized enterprises (SMEs) sector development. It analyses and determines the firm specific characteristics that affect SMEs’ access to finance and especially external financing. The study compares the access to finance of EU SMEs with Albanian and Macedonian SMEs. This study uses the database of the surveys conducted by the European Central Bank and European Commission for 2011 and 2013 and selects the data for EU, Albania and Macedonia to test the hypotheses. Both Albania and Macedonia are developing countries and have the similar growth process of SMEs. The strongest point of Macedonia is the legal system, which helps the wellfunctioning of market economy. The Macedonian government completed the registration of real estates. This increased the access to external finance to Macedonian SMEs. On the other hand, the biggest problem of Albania is the registration of real estate. This factor puts a barrier in the access to external finance especially in bank loans for start-up or business growth (lack of collateral). The limitation of the study comes as a consequence of analysis based in the declarations that entrepreneurs of SMEs made by themselves and not in the statistical data of enterprises.