The impact of microfinance on the development of SMEs: Kosovo – an integrated review

Abstract

Surveys have been conducted all over the world among small business owners to identify some of the main obstacles that impede the sustainable operation of businesses. The majority of the owners have indicated a lack of finance as the main stumbling block to doing business in a way as to assure continued growth. This is especially notable when considering the central Eastern European region with its underdeveloped capital market. Funding SMEs with microfinance loans, especially in developing areas such as Kosovo, is one of the major strategies undertaken to enhance the expansion of the existing businesses and improve their performance. Purpose: The purpose of this paper is to review the presumable impact and crucial role of microfinance institutions on the development of SMEs in Kosovo. Methodology: The methodology is based upon a descriptive approach whereby a comparison is made between different reports, papers, journals and other literature on the subject. Findings: According to the available statistical and financial data, the benefits of microfinance are multiple and the promotion of microfinance and the availability of microcredit or small loans to SMEs in Kosovo has been shown to succeed as a solution to meltdown problems with working capital.