Stimulating the Growth and Development of Small and Medium Size Enterprises through Financial Sector Policy Reform in Poland

This paper identifies the most immediate financial sector policy constraints which are limiting further development of the small and medium sized (SME) business sector in Poland.

The paper further reveals that a fundamental problem in the growth and diversification of Poland's economy is limited access to capital by SMEs. Short-term credit is extremely expensive and difficult to access without excessive collateral security. The expansion of credit activity to the private sector has been severely constrained by the absence of an efficient and effective collateral law.

The study concludes that:

• Further growth of the private sector in Poland is clearly limited by a number of financial sector policy constraint in the areas of law, regulation, taxation policy, access to information, and banking sector structural reform. To combat these constraints, there should be financial sector reforms: legal and regulatory reform, fiscal policy reform in the banking sector and a direct credit mechanism to assist SMEs;
• Banks need to develop lending policies and internal procedures that are more focused on SMEs: training and skills in business planning and cash flow analysis, less emphasis on collateral and more on intuition and good judgment.