1. Meldina Kokorović Jukan, Federation of Bosnia and Herzegovina , Bosnia and Herzegovina
2. Bahrija Umihanić, Prirodno-matematički fakultet Banja Luka, Federation of Bosnia and Herzegovina , Bosnia and Herzegovina
3. Amra Nuhanovic, Faculty of Economics University of Tuzla , Federation of Bosnia and Herzegovina , Bosnia and Herzegovina

Financing of entrepreneurial firms is always a challenging task. Conventional financing sources (such as commercial banks credits, bonds and stocks emission in capital markets) are not always available to entrepreneurs in early stage of entrepreneurial activity because there is no available data on their credit history which is necessary for financial institutions and other investors to finance business operations of their clients. Due to the fact that entrepreneurial activates are becoming the important driver of economic development in both, developed and developing countries, new financial institutions and financing instruments are being created to address the growing need for financing entrepreneurial activities. The main purpose of this paper is focused on the examination of different types of financial resources available for financing entrepreneurial firms in the early stage of entrepreneurial activity. In that respect, the early stage of entrepreneurial activity is defined according to Global Entreprenurial Monitor methodology as a period of the first 3,5 years or first 42 months of doing business, which is the turning point for establishing successful business or discontinue entrepreneurial activity. Research is focused on determining present state of available financial sources for financing entrepreneurial activities in Bosnia and Herzegovina and changes in financial sources availability for last five years. The overall goal is to identify financial sources, immanent to different stages of early entrepreneurial activity and in respect to different characteristics (risk level) associated with particular business venture, which are fostering survival and development of a business. In order to conduct the relevant research, we propose two following scientific hypothesis: first, demand of different types of financial products is determining efficient financing in different stages of early entrepreneurial activity and second, financial resources available through different types of financial institutions in Bosnia and Herzegovina are not adequately structured to the needs of entrepreneurs starting new business. Methodologically, this research will be conducted within two phases. In the first phase, a desk research will be conducted in order to identify and enlighten the theoretical aspects of entrepreneurial financing. In the second phase a specific questionnaire will be sent to the financial institutions in Bosnia and Herzegovina to investigate the degree of development of available financial products for entrepreneurs which will be the basis for providing recommendations for more usable financial products for financing new businesses. For the purposes of this research all financial institutions (commercial and development banks, microcredit organizations and foundations, leasing companies and NGOs), as well as government agencies and entity and state level institutions proving financial sources for entrepreneurs will be surveyed. Following results of this research are expected: identification of all available financial sources to entrepreneurs in early stage of entrepreneurial activity, ranking of financial sources according to availability and attractiveness in terms of obtaining those sources, formulation of recommendations for financial institutions and government agencies for more adequate structuring of a financial products demand to entrepreneurs.

Key words: entrepreneurial financing; financial institutions; financial products

Conference: REDETE 2014 - Researching Economic Development and Entrepreneurship in Transition Economies

Date: 16.10.2013.