Investigating Financial Challenges Facing Enterprises: Evidence from Albania

This paper focuses on the analyses of financial obstacles facing small and medium enterprises in Albania. Using data from 2019 Enterprise Surveys (ES) we try to give answers to questions related to financial patterns that characterise Albanian enterprises. The survey was a shared project of the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the World Bank Group (WBG), the data are collected in Albania between January and May 2019. The objective of the survey is to better understand firms experience in the private sector. Collected data are based on firms’ experiences and perception of the environment in which they operate. The data are stratified in three levels for Albania: industry, enterprise size, and region. The stratification according to the industry was completed as follows: Manufacturing—combining all the relevant activities, Retail, and Other Services. Moreover, 2019 Albanian ES was based on the following size stratification: small (5–19 employees), medium (20–99 employees), and large (100 or more employees). Regional stratification was done across three regions: Northern Albania comprising Dibër, Durrës, Kukës, Lezhë, Shkodër, Central Albania comprising Tirana and Elbasan, and Southern Albania comprising Berat, Fier, Gjirokastër, Korçë, and Vlorë. To analyse financial obstacles and factors affecting on them we estimate the Ordered Probit model where the dependent variable corresponds to the survey question: “How much of an obstacle: access to finance?”. Whilst the vector of independent variables is composed by enterprise characteristics such as firm size, ownership structure, legal status, region, etc. Moreover, dummy variables are used to capture firm’s technological capability, and gender ownership. Empirical results show that financial obstacles tend to be more significant for smaller enterprises, operating not in the central area of the country, and female ownership means more challenges in the financial markets. Additionally, lack of financial challenges has a steadily constructive impact on the productivity of SME-s.