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Evalutating development assistance to SMEs in Albania

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Evalutating development assistance to SMEs in Albania Powered By Docstoc
					  Evalutating development
assistance to SMEs in Albania
          Andrea Gamba
        Alba di Canazei, July 1, 2008
                     Motivation
      What is the impact of subsidized credit on firms
   performance? Are there potential spillovers to the entire
         economy? Does capacity building matter?

• Evidence of credit constraints in rural markets in developing
  countries
   Microfinance, credit unions, group financing
• No compelling evidence about constraints in urban areas and
  for manufacturing firms.
   Many programs subsidize loans to Small and medium
  sized firms, both in developing and developed countries.

• Italian Development Cooperation about to launch ambitious
  SME assistance programme in Albania
           Related literature
• Fazzari, Hubbard and Petersen (1998); Lamont
  (1997); Rosenzweig and Wolpin (1993):
  financially constrained firms show excess
  sensitivity of investment to movements in cash
  flows
• Kaplan and Zingales (2000, 2002): financial
  constraints are not robustly related to
  investment-cash flow sensitivity
• Banerjee and Duflo (2004): quasi natural
  experiment on SMEs in India. credit constraints
  are high and directed credit alleviates the
  problem
        Main empirical issues
• Impossible to isolate true credit demand
• Credit substitutes can be correlated with
  unobservable productivity
• OECD and donor community: build
  capacity of firms, rather than give “plain”
  credit!
  Albanian economic and financial
              context
• Loan stock on GDP: 18% (August 2007).
  Serbia has 23%, Croatia 66%.
• But credit is growing rapidly: 82% year on
  year in 2005 and 50% in 2006.
 underdeveloped financial markets, with
  possibly deteriorating loan quality.
• High unemployment, large trade deficit,
  dependence on remittances, a very weak
  manufacturing sector.
A snapshot on Albanian enterprises
                                                                        Settori di attività
             Dimensione delle imprese

                                                      100%
 100%
                                                      90%
  90%
                                                      80%
  80%
                                                      70%                                          Servizi
  70%
                                                                                                   Commercio
  60%                                                 60%
                                              21-80                                                Trasporti
  50%                                         6-20    50%
                                                                                                   Costruzione
  40%                                         1-5     40%
                                                                                                   Manifattura
  30%                                                 30%
                                                                                                   Trasf. agricola
  20%                                                 20%
  10%                                                 10%
  0%                                                   0%
        Shkoder   Kukes    Lezhe    Albania                  Shkoder   Kukes    Lezhe    Albania




• Very large incidence of micro enterprises
• High prevalence of service activities.
• Firms concentrated in Tirana-Duress area.
   The Italian SMEs Development
      Assistance Programme
• €25 million credit line to eligible SMEs
  – Eligibility mainly on size
• €2.5 million for Guarantee Fund
  – Expected to cover 10% of collateral of
    qualified loans
• €1.8 million in TA
  – Seminars, Capacity building of stakeholders,
    “train the trainers”
            Empirical strategy
• Data collected from firm balance sheets and
  additional surveys.
  – Questionnaire design: suggestions welcome! Would it
    be possible to analyze stakeholders?
• Trackability for last two years and throughout the
  programme (three years)
• Non randomized programme: need matching
  with appropriate control group
  – Cooperation with Albanian institutions to get
    representative control sample
                Some issues
• Matching would not wipe out “unobservables”
  that drive self selection (say productivity)
  – Alternative approach: first match regions where info
    about programme is disseminated and similar ones
    where no such activity takes place
  – Use info dissemination (ITT) as instrument? (Thanks
    Nava!)
• What if criteria for lending are changed on the
  way?
• Is it possible to disentangle simple credit from
  capacity building? Need double randomization?
• What about the guarantee fund? Difficult to find
  a control group for that!
              Some hopes
• Programme in launching phase
  – openness to amendments to facilitate rigorous
    inference!
• Government and stakeholder cooperation
• Your suggestions!

                THANK YOU!

				
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posted:9/19/2011
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