European experience and Ukrainian realities in the policy of financial support entrepreneurial sector

Aim/purpose – We want to provide recommendations to bridge the gap in access to financing of the entrepreneurial sector in Ukraine based on the analysis of European experience, EBF approaches, financial funds for SMEs and the current state of the credit market in Ukraine. Design/methodology/approach – We used the general scientific methods of knowledge, conceptual tenets of the theory of market economy, abstract logical analysis and synthesis, induction and deduction, historical (to determine the nature and causes of bank investment in SMEs, refine categories and terms); formalization, systems analysis (to determine factors of investment banking, institutional and legal environment); statistical, retrospective analysis. The results of surveys conducted by the EBF on the issues of support and development of SMEs are used, own research of 120 Ukrainian SMEs, which was conducted during the period from January to July 2016. The nature of the research questions was reinforced by the decision to survey only SMEs. Independent reporting (from entrepreneurs or CEOs) was used to account for both business activity and the external sources of information. Findings – Policy initiatives should primarily be developed at the national level in the field of lending to SMEs based on the European experience and Ukrainian realities; it is necessary to develop an understanding of the need for access to certain types of information; SMEs are the main providers and the most valuable source of credit information. Research implications/limitations – When using the methods of calculation creditworthiness perhaps to take into account the methods for assessing the quality of management, the image of the enterprise, ISO certificates. Originality/value/contribution – Based on the cross-country comparison of the EU and Ukraine, highlight the necessity of focusing on some legal unification of SME lending procedures for the development of a culture of sustainable entrepreneurship on the European continent

ADB–OECD Study on Enhancing Financial Accessibility for SMEs: Lessons from Recent Crises

During the era of global financial uncertainty, stable access to appropriate funding sources has been much harder for small and medium-sized enterprises (SMEs). The global financial crisis impacted SMEs and entrepreneurs disproportionately, exacerbating their traditional financing constraints. The financial conditions of many SMEs were weakened by the drop in demand for goods and services and the credit tightening. The sovereign debt crisis that hit several European countries contributed to further deterioration in bank lending activities, which negatively affected private sector development. The global regulatory response to financial crises, such as the Basel Capital Accord, while designed to reduce systemic risks may also constrain bank lending to SMEs. In particular, Basel III requires banks to have tighter risk management as well as greater capital and liquidity. Resulting asset preference and deleveraging of banks, particularly European banks with significant presence in Asia, could limit the availability of funding for SMEs in Asia and the Pacific. Lessons from the recent financial crises have motivated many countries to consider SME access to finance beyond conventional bank credit and to diversify their national financial system. Improving SME access to finance is a policy priority at the country and global level. Poor access to finance is a critical inhibiting factor to the survival and growth potential of SMEs. Financial inclusion is thus key to the development of the SME sector, which is a driver of job creation and social cohesion and takes a pivotal role in scaling up national economies. The Asian Development Bank (ADB) and the Organisation for Economic Co-operation and Development (OECD) have recognized that it is crucial to develop a comprehensive range of policy options on SME finance, including innovative financing models. With this in mind, sharing Asian and OECD experiences on SME financing would result in insightful discussions on improving SME access to finance at a time of global financial uncertainty. Based on intensive discussions in two workshops organized by ADB in Manila on 6–7 March 2013 and by OECD in Paris on 21 October 2013, the two organizations together compiled this study report on enhancing financial accessibility for SMEs, especially focusing on lessons from the past and recent crises in Asia and OECD countries. The report takes a comparative look at ADB and OECD experiences, and aims to identify promising policy solutions for creating an SME base that is resilient to crisis, from a viewpoint of access to finance, and which can help drive growth and development

Asset securitization for small and medium-sized real estate enterprises in China

Based on the economic background of strict regulation and control of real estate bank credit and on the background of vigorous development of the financial system of direct financing in China, this thesis analyzes the necessity and feasibility of asset securitization financing for small and medium-sized real estate cmpanies. It shows that this type of financing is not only in line with the direction of the dual economic and financial reforms, but also that small and medium-sized real estate companies can meet their financing needs by relying on their specific high-quality assets rather than the main body credit financing. Using Company A as a typical case, we carried out design of the securitization program for the underlying asset pool construction, choice of bankruptcy remote and credit enhancement instruments, and product tranches, based on the characteristics of the asset composition status and low credit rating of the main body. Not only does it meet financing needs, but it also improves other financial situations. Therefore, this thesis has reference value, promotion, and practical significance for small and medium-sized real estate companies.Este trabalho analisa a necessidade e a viabilidade do financiamento de pequenas e médias empresas imobiliárias por via da securitização de ativos, no contexto económico da rigorosa regulamentação do crédito imobiliário e do vigoroso desenvolvimento do sistema de financiamento direto na China. Demonstra-se que este tipo de financiamento não só está de acordo com a direção da dupla reforma no âmbito da economia e das finanças, mas também que as pequenas e médias empresas do setor imobiliário podem satisfazer as suas necessidades de financiamento por via dos seus ativos específicos de alta qualidade como alternativa ao crédito por financiamento bancário. Utilizando a empresa A como um caso típico, elaborou-se o desenho do programa de securitização para uma pool de ativos subjacentes, a seleção de instrumentos de isolamento de insolvência e de melhoria do nível do crédito, e o desenho do programa de securitização com tranches de produtos, com base nas características dos ativos e na avaliação de crédito da estrutura principal. Isto não só satisfez as necessidades de financiamento, como também melhorou outras condições financeiras. Por conseguinte, este trabalho tem valor de demonstração, de divulgação e significado prático para as pequenas e médias empresas imobiliárias chinesas

Corporate finance in the euro area – including background material

This report analyses the financial position of non-financial enterprises in the euro area, in particular the amount of external financing, the choice between debt and equity and the composition and maturity structure of debt. It aims at identifying the main features of the euro area, as well as the peculiarities that depend on the country of origin and the sector of activity. Attention is also devoted to assessing whether a country’s institutional eatures are correlated with different financial structures by firms. In light of the particular interest in the access of small and medium-sized enterprises (SMEs) to financing, the report also analyses how financing patterns differ across large, medium-sized and small enterprises. Finally, the report discusses the recent trends observed in the corporate finance landscape of the euro area over the past few years. Although it is still too early to pass final judgement, vast structural changes are underway that could have already influenced in a positive way in the availability of external funds for firms. All in all, a comprehensive understanding of corporate finance in the euro area is important from a monetary policy perspective, given its impact on the transmission mechanism and for productivity and economic growth. Moreover, such an understanding is also relevant from a financial stability perspective. A first assessment is now possible eight years into the third stage of Economic and Monetary Union (EMU), given that sufficient data have been accumulated during this period. This assessment is particularly important as the introduction of the single currency has had significant structural effects on the working of financial markets, increasing their size and liquidity, and fostering cross-border competition. The data available for this report generally cover the period 1995-2005, and the cut-off date for the statistics included is 10 March 2007.

The implications of European retail banking integration on small and medium-sized enterprises financing. An overview

Considering the last few years, the European Union (EU) has became one of the most competitive and integrated economic regions of the world, following a rapid pace of change as a result of an inspired series of initiatives. The harmonization of the banking and other financial services legislation as component of the EU’ Single Market, the creation of the European Economic and Monetary Union (EMU), alongside the ongoing implementation of the Financial Services Action Plan (FSAP) represent the central drivers of financial integration and the set of elements that have helped reducing the barriers to cross-border trade in banking services. The process of deregulation is another element that facilitated the environment in which technology and other bank strategic determinants have become increasingly important. The scope of the present paper is to analyze the implications of a higher degree of banking integration on firms financing options and choices. This paper is composed of two main parts. The first part focuses to the determinants of European banking integration, analyzing this process since the banking system represents the main financial channel for both the small and medium-sized enterprises and households. The second part concentrates on the effects of banking integration on considered entities’ financial constraints. The concluding remarks outline that retail bank integration has an ambiguous implication on SMEs’ access to credit.retail banking integration; SMEs; firms’ financing; financial constraints; deregulation

Comparative Appraisal of Multilateral and Bilateral Approaches to Financing Private Sector Development in Developing Countries

private sector development, development cooperation, bilateral aid, multilateral aid

Growth Rates of State-owned and Private Enterprises in China and Their Innovation Strategies

Based on Schumpeterian model, new models are constructed to analyse growth rates of SOEs, LPEs and SMEs and their innovation strategies. Average growth rates of each type firms are divided into two parts: (1) increase rates of each type firms’ scale; (2) technology-led growth rates. The order of average growth rates of each type firms is determined by whether their superiorities in some determinants of growth rates could prevail over their inferiorities in other determinants. And proportion in total production of firms with the highest growth rate increases over time, whilst proportion of firms with the lowest growth rate decreases over time. Proportion of firms with medium growth rate decreases over time if the difference between the highest growth rate and the medium growth rate is larger than the difference between the medium growth rate and the lowest growth rate. In terms of innovation strategy, at the early stage of development, imitating advanced technology from technology frontier is a better choice than undertaking R&D activities for each type firms. For one certain type firms, if the required least advantage in technology research capability to cover per unit of differences in technology gap can be satisfied, the imitation rate of this type firms is lower. In addition, if technology-led growth rates of each type firms are up to a certain level and innovation research capability could satisfy the lowest requirement, imitation rates will decrease in order to improve technology-led growth rates. Based on the model with endogenous step size of technology improvements, trends of preferences of imitating advanced technology is generally determined by technology gap and research labour