THE EFFECTS OF ESTABLISHING A LEGAL FRAMEWORK FOR MICROFINANCE IN SERBIA

Abstract

The existing model of microfinance in Serbia has a limiting effect on its efficient operation and satisfaction of demand for micro credits, thus implying a need for the establishment of an appropriate legal framework for the development of microfinance sector. Starting from the basic role that microfinance, particularly microcredit, has in the process of fostering sustainable economic development, the paper aims to highlight the importance of establishing an adequate legal framework in this area and the positive socio-economic effects arising from it. This paper analyzes the current model of microfinance in Serbia, as well as selected European experience in this field. The analysis of Romania, as an example of good practice, has shown that the existence of an appropriate legal framework allows for more efficient functioning of microfinance and encourages the development of microcredit and microenterprises.