SME characteristics and their tendency to lease in Albania

Enterprises need constant financing to continue their activities and face many struggles in finding new financing sources. Various surveys on access to finance show that bank loans and overdrafts are the most widespread debt financing methods for SMEs, but alternative sources also have high relevance. This study examines the role of financial leasing as a vital alternative financing option for small and medium-sized enterprises (SMEs), particularly in emerging economies where traditional funding sources may be limited. The research aims to investigate the correlation between firm characteristics—such as assets, income, number of employees, and age—and the likelihood of using leasing as a financing tool. Data were collected through interviews and questionnaires distributed in 250 SMEs located in Tirana, Albania, providing valuable insights into these relationships. The results reveal that firms with more assets and higher income levels are less inclined to use leasing, likely due to their ability to access traditional financing methods. Conversely, firms with a larger number of employees are more likely to adopt leasing, reflecting their growing capital needs. The study finds that older firms in are more likely to use leasing, suggesting that as businesses mature, they become more open to leasing as an alternative financing solution. These findings contribute to the understanding of SME financing dynamics in emerging markets, offering practical implications for policymakers and financial institutions seeking to improve access to leasing for SMEs.