The Balkan nation of Serbia suffers from many of the same problems with credit access as its neighbors. And as with its neighbors, these problems pose a significant obstacle to small-scale, grassroots economic development. That being said, there are several initiatives underway to help to improve credit access in Serbia until the Serbian financial industry is able to offer expanded opportunities to secure credit.

In the wake of the 2008 financial crisis, Serbian banks have set very rigid requirements in order to secure a line of credit. Interest rates tend to be prohibitively high for small business owners, and there are many regulations in place that discourage lending to small businesses and startups because they are perceived to be too risky. The government has introduced subsidies and risk-sharing programs to try to mitigate this problem at great cost to the state, but this has not been sufficient to really improve credit access in Serbia. It is estimated that small and medium-sized enterprises in Serbia are collectively in need of €267 million worth of financing that Serbian banks are not willing to lend.

This is not to say that the Serbian financial industry is underdeveloped or ill-equipped. The World Bank is quite satisfied with the state of credit access in Serbia at a broad level. However, it does acknowledge that small and medium-sized enterprises experience more difficulty than they should when trying to access credit.

There have been several positive developments over the past several years that bode well for the future of credit access in Serbia. Recently, banks have begun to change the risk assessment procedures that they use when dealing with small and medium-sized enterprises. Where previously these entities were assessed in the same manner as a large corporation would be, many banks now use a procedure that takes into account the comparatively small size of these enterprises and does not allow size or inexperience to negatively impact the applicant.

Additionally, many international entities have stepped in to extend additional microfinancing money to be used to improve credit access in Serbia. The European Investment Bank recently provided €30 million to ProCredit Holdings in Serbia. This is intended to promote long-term, stable credit access in Serbia that will encourage economic growth and development for years to come.

While credit access in Serbia remains less than ideal, these recent developments represent major improvements over the previous situation. If similar improvements continue to follow, it can be expected that improved credit access will precipitate much greater economic development in Serbia in the coming years.

– Michaela Downey

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