Local government policy towards the financial instruments supporting entrepreneurship

Objective: The objective of the article is to determine the scope of the use of financial instruments to support entrepreneurship by communes in Poland. Research Design & Methods: The article is a quantitative study. The source of data was a survey carried out among Polish Local Government Units (LGUs). In the article several methods were used: descriptive statistics methods, variable classification and grouping, Pearson’s chi-square coefficient, Cramer’s V coefficient and comparative analysis. Findings: The research results indicate that LGUs conduct inefficient fiscal policies. LGUs do not measure the results of their policies and do not address their activities oriented on entrepreneurship support well. As a result, one in five of the surveyed units was exposed to negative budgetary effects because of the policy on the tax on means of transport and more than every fourth one in relation to the real estate tax. Implications & Recommendations: LGUs should diagnose local economic conditions in terms of individual needs and choose instruments that match the unique conditions of the local environment. LGUs should also pay more attention to measuring the effects of their activities in order to stop ineffective activities and reorient associated financial streams. Contribution & Value Added: Due to the scope, multifacetedness and uniqueness of the collected data, the article is a significant added value in terms of recognizing the scope and diversity of LGUs’ use of financial instruments to stimulate entrepreneurship in Poland. The undertaken topic related to the widespread problems with LGU financing is an important contribution to the discussion on strengthening the effectiveness of the financial policy of Polish LGUs.