Study of the Financial Sector and SME Development in Poland

This paper explains the transition from a centrally planned economy to a free market system. Although expansion of the private sector has been dramatic, the rate of further development is constrained by:

• Traditional business practices;
• Lack of management and planning experience;
• Cash flow problems;
• Individualism;
• Links between SOEs and the private sector;
• Marketing, financial and accounting methods.

The paper concludes that:

• The government should adopt a comprehensive policy in support of small and medium sized business;
• Government activity should focus on removing constraints to SMEs that are within their control;
• It will be necessary to receive continued support from foreign assistance agencies.

The paper makes the following recommendations:

• Establish a new government institution in support of SME development;
• Ongoing technical assistance should be provided to the new SME advocacy unit to transform policy guidelines;
• Address the financial constraints to SME development;
• Establish a selected task force of bankers, private sector entrepreneurs and government representatives to advocate implementation of financial recommendations.