Perspectives of SME financing through capital markets : the case of Croatia

Small and medium enterprises (SMEs) are considered generators of economic growth, added value, employment and innovation worldwide. They face numerous issues, especially in the early stages of a life cycle, from available sources of financing to strategic and market challenges. Due to its importance, the SME sector has often been supported by the government, development agencies and European institutions and programmes. The European Union stimulates the SME sector through different initiatives, as well as their easier access to various sources of financing. The aim of the paper is, therefore, to determine the possibilities and perspectives for equity financing of SMEs in Croatia using capital markets. More specifically, the aim of the paper is to compare key efficiency indicators of SMEs in Croatia and other similar SMEs listed on SME stock exchanges in Europe and worldwide, using quantitative methodology. Discussion of the research results determines the potential and limitations for the equity financing of Croatian SMEs through an organised SME stock exchange. The paper uses quantitative methodology, which consists of a comparative analysis of financial indicators and correlation analysis on a sample of chosen SMEs in Croatia and worldwide. The paper also discusses the expectations and current effects of the EU initiative - Capital Markets Union on the SME sector and capital market in Croatia. The paper's conclusions contribute to discussion and to initiatives for developing an SME stock exchange and strengthening the equity financing of the SME sector in Croatia.