THE PARADOX OF ACCESS TO FINANCE IN THE CIRCUMSTANCES OF CAPITAL MISALLOCATION: EMPIRICAL EVIDENCE FROM LATVIA

Abstract

The availability of funding is one of the key problems in the small and medium-sized businesses not only in Latvia, but also all over the European economic space. The lack of funds results in the starvation of the economy preventing it from full-fledged development. According to statistics, the loan portfolio of the commercial bank system of Latvia (CBSL) steadily shrank in the period between 2008 and 2014. It, to a large extent, was due to the effect of the recession characterized by writing off the bad debts and gradual correction of the household indebtedness, at the same time the raised funds show a positive trend