Factors Affecting Micro and Small Enterprises’ Access to Microfinance in Croatia

Micro, small and medium enterprises (MSMEs) are recognized worldwide as crucial element of boosting economic growth, reducing unemployment and poverty. In order to achieve growth, develop new products, create new jobs, they need to get finance. However, they are facing financing constraints, and persistent limitations to access to finance remain to be a major obstacle for them. Thus, financial inclusion is important for economic welfare and sustainable economic development. This study aims to identify the determinants of access to micro loans for micro and small enterprises (MSEs) by considering entrepreneur characteristics, firm characteristics, and perceived business obstacles. Data set of 173 MSEs from Croatia – the region Dalmatia, is available for the purpose of investigating and comparing characteristics of those that are financed and those that are not financed by micro loans. Besides, the paper also presents the logistic regression model which identifies set of characteristics which have significant relation with the MSE tendency to be financed by micro loans.