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Community Development Banking to Foster Entrepreneurship: A Comparison between Experiments in Hungary and Poland

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Non‐government assistance programmes to finance entrepreneurship are particularly suited to the situation of transition economies, as they support the development of efficient markets and the building of social capital. A publicly sponsored network of development banking institutions would promote small business development, assist in the development of entrepreneurial skills, and provide special assistance to disadvantaged areas. It would help by making small business finance more accessible and connected with the provision of necessary advice and assistance. The institutions would be publicly capitalised, but run locally by non‐profit organisations in collaboration with local governments and the private sector. Direct involvement of banks is required to supervise performance. While community development banking cannot solve all the problems of initial entrepreneurial finance, it can help to narrow the gap and tackle market failures.

Document Type: Review Article

Publication date: November 1, 2007

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