Small and medium-sized enterprises account for over 99% of active businesses inBosnia and Herzegovina, and face a number of limitations when performing theirbusiness activities. A number of those limitations relate to the nature of small andmedium-sized enterprises, but most are due to the inadequate legal and regulatoryframework for doing business. A disincentivised business environment and lack ofa unified economic policy and sector strategies further complicate the position ofsmall and medium-sized enterprises. The aim of this paper is to show the limitationsfaced by these companies. To this end, an investigation involving 119 small and medium-sized enterprises in Bosnia and Herzegovina was conducted.Convenience sampling was used in the research. Based on the survey, it is evidentthat respondents rated the tax burden factor (the tax structure and taxation process)the most problematic. This finding corresponds with Doing Business’ 2019 surveyresults.A section of this paper is devoted to the fiscal aspect of doing business: tax regulationsand the overall tax burden and taxation procedures. It shows that the magnitudeof the fiscal burden, the complexity of tax regulations and the inconsistency andcomplexity of the taxation system are a significant burden on small and medium-sizedenterprises. The paper concludes with recommendations for more efficient andsimpler tax regulation.

Abstract This research is designed to examine the relationship between the capital structure and profitability of non-financial firms in Bosnia and Herzegovina during the ten years period, from 2003-2012. The goal is to prove the existence of the relationship between the firm’s capital structure choice and its profitability. The analysis is extended by including the debt structure and differentiating between the types of debt such as the long-term and the short-term ones. Canonical correlation and multiple regression analysis are used. The results of the multivariate canonical correlation analysis provide support to a hypothesis that the capital structure and profitability have statistically significant relationships. Furthermore, the findings provide support that firms develop different patterns of profitability depending on the capital structure choice. We found that an increasing proportion of short-term debt and long-term debt in the overall liability of the firm reduces its profitability.

The purpose of this study is to carry out a comprehensive and robust analysis of the determinants of the capital structure of the Federation Bosnia and Herzegovina (FBiH) companies at the industry level. A large number of hypotheses of different classes of theories are tested. Estimating the dynamic panel models using the system of generalized method of moments (GMM) estimator, we captured both cross-sectional and inter-temporal relationships between the leverage in companies and its determinants. The results show that profitability, collateral value of the assets and the risk, measured by earnings volatility, negatively affect company's leverage, while inconsistent results were for the relationship between different proxies for firm's future growth opportunities and leverage, whereby the firm size overall has no relationship with the firm' s leverage. The findings reflect the transitional nature of the FBiH corporate environment.They suggest that some of the insights from modern finance theory of capital structure are applicable in the FBiH in that certain firm-specific factors that are relevant for explaining capital structure in developed economies are also relevant in the FBiH. Overall, the empirical evidence presented in this Study finds it difficult to demonstrate the validity of the trade-off and the pecking order theories as stand-alone models. The Study’s results also point at several unique aspects of financing behavior in developing countries, from which specific implications for further research follow. DOI: 10.5901/mjss.2015.v6n2s5p188