The financing of SMEs in Poland with particular reference to the role of banks

The development of a SME sector is widely recognised as being essential to overcome the problems countries face as they are transformed from centrally planned into market economies. Therefore sustaining the growth of the private SME sector is important. The shortage of external finance is reported to be one of the main constraints SMEs are facing and opportunities for SMEs to access credit facilities from banks and financial support programs are still limited, especially for long-term credit. The creation of an efficient working financial market in Poland therefore is a very important part in the transition to a market economy. However, if such a financial market is to be established successfully, the needs and motivations of both small business owner-manager and banks have to be taken into accomlt. In other words, government programmes and policies as well as support programmes by other organisations should consider these needs and motivation to contribute effectively to the development of the financial market and thus to the development of the SME sector in Poland. The thesis aims to contribute to a better understanding of the operation of the financial market with respect to SMEs in Poland, focusing on the role of banks. This includes considering the factors influencing the demand for finance by fimls, factors influencing the practices of banks with respect to supplying finance to these finns and the relationship between the two. The main findings in this respect are that owner-managers have to focus on their relationship to banks, whereas banks need to recognise the small business sector as an important fragment of the lending market, and, if they want to penetrate this market, they have to adjust their lending policies accordingly. With regard to policy makers it appears that they need to improve their understanding of the small business sector in order to realise the effect general regulations have on small firms and in order to provide suitable support programmes to eliminate size related disadvantages experienced by SMEs. Moreover, policy makers should consider the low level of interest that currently exists among commercial banks in dealing with SME when choosing channels for their support schemes