Title: The impact of access to finance and institutional barriers on SMEs' performance: difference between the formal and informal sector

Authors: Kujtim Zylfijaj; Dimitar Nikoloski

Addresses: Institute for Economic Research and Legal Studies (IERLS), Perandori Dioklecian, No. 17, 10000 Prishtina, Kosovo ' Faculty of Economics Prilep, University 'St. Kliment Ohridski', Bitola, Macedonia

Abstract: This paper explores the impact of access to finance and institutional barriers on small and medium-sized enterprises' (SMEs) sales. For the purpose of this empirical study, two samples were used for both formal and informal SMEs in Kosovo. The sample of formal SMEs consists of 1,000 businesses, while the sample of informal SMEs consists of 250 businesses. The logit models were employed to find out the impact of access to finance and institutional barriers on SMEs performance in both sectors. Findings indicate that access to finance and institutions affect the performance of SMEs in the formal and informal sector. Furthermore, findings show that access to finance and institutional barriers affect the performance of formal SMEs more than informal ones. The evidences show that formal SMEs outperform informal ones in terms of sales.

Keywords: small and medium-sized enterprises; SMEs; access to finance; institutional barriers; sales; performance; formal sector; informal sector.

DOI: 10.1504/IJESB.2021.117343

International Journal of Entrepreneurship and Small Business, 2021 Vol.43 No.4, pp.479 - 501

Received: 18 Aug 2018
Accepted: 09 Feb 2019

Published online: 24 Aug 2021 *

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