assistance to SMEs in Albania
Alba di Canazei, July 1, 2008
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
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
• Fazzari, Hubbard and Petersen (1998); Lamont
(1997); Rosenzweig and Wolpin (1993):
financially constrained firms show excess
sensitivity of investment to movements in cash
• 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
Main empirical issues
• Impossible to isolate true credit demand
• Credit substitutes can be correlated with
• OECD and donor community: build
capacity of firms, rather than give “plain”
Albanian economic and financial
• 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
A snapshot on Albanian enterprises
Settori di attività
Dimensione delle imprese
50% 6-20 50%
40% 1-5 40%
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
• €25 million credit line to eligible SMEs
– Eligibility mainly on size
• €2.5 million for Guarantee Fund
– Expected to cover 10% of collateral of
• €1.8 million in TA
– Seminars, Capacity building of stakeholders,
“train the trainers”
• Data collected from firm balance sheets and
– 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
• 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
• What if criteria for lending are changed on the
• 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!
• Programme in launching phase
– openness to amendments to facilitate rigorous
• Government and stakeholder cooperation
• Your suggestions!