THE ROLE OF PUBLIC DEVELOPMENT BANKS IN THE GROWTH OF SMALL AND MEDIUM ENTERPRISES

Abstract

In this study we focus on public development banks in order to see how effective their support has been on the SMEs performance and growth. The Republic of Srpska Investment-Development Bank (in Serbian: Investiciono razvojna banka Republike Srpske – IRBRS), provided the empirical context for our research.  We explored the impact of IRBRS loans on selected business performance indicators: sales, profit and capital of SME borrowers. The study was based on the comparison of selected performance indicators during the five-year period before (2003-2007) and the five-year period (2009-2013) after using IRBRS loans. The selected indicators were also compared with those of the control group, non users of IRBRS loans. The results based on the representative sample of SMEs in the Republic of Srpska show a positive impact of IRBRS loans on sales, profitability and capital of SME borrowers, therefore confirming the positive impact of public development banks on the SMEs performance and growth.