Financing of the firm under the impact of the financial crisis. Evidence from CEE countries

This paper explores the problems experienced by the firms from the analyzed CEE countries regarding the access to finance under the impact of the financial crisis. The easy access to finance is a vital problem for the firms because it affects their development but also their survival. Also, the existence and activity of the firms appears in an interdependent relationship with the economic situation of the country in which they operate. So, if the economy of the country is affected by the financial crisis then this interdependent relationship leads to problems related to firms financing. Through this paper we analyze 245 firms from seven countries in Central and Eastern Europe member of the European Union (Bulgaria, Estonia, Latvia, Lithuania, Poland, Romania and Hungary). Using an econometric model we observe the changes that appear in the financing decision of these firms under the impact of the financial crisis. The results show that the current financial crisis had a significant influence on the financing decision of the analyzed firms causing significant changes of their level of indebtedness, especially a decrease

Assessing the Role of Access to Finance for Young Potential Entrepreneurs: The Case of Romania

The significant role played by youth entrepreneurship for the economic growth of countries has shift the attention of researchers to the potential entrepreneurs, and how to stimulate the enter on the market of new and innovative individuals which might have positive effects on economic development. The present research is conducted to identify the influence of some characteristics of business environment and of access to financial resources on entrepreneurial intentions of faculty students from one of the largest universities of Romania. We conducted the study on a sample of undergraduate and master students, by applying a questionnaire. The main objectives of this paper are to analyze how the young potential entrepreneurs perceive the access to finance for start-ups and if this factor would be a significant predictor of the decision to become entrepreneurs of the students. In addition, our study discusses how policy makers could provide support for young people to create innovative businesses, from a financial perspective. Our findings show a high level of entrepreneurial intentions among the interviewed students, but also that easy access to financial resources is the most important obstacle identified by the students with entrepreneurial intentions. Young entrepreneurs encounter significant obstacles in trying to obtain the necessary financial resources because they do not have a market history or sufficient guarantees. Access to information and fewer business regulations were also identified as factors with a significant contribution on the entrepreneurial orientation of youth. The implications of the study are significant for potential policy intervention, because emphasize the need of the policymakers to stimulate young entrepreneurs by promoting policies that allow young entrepreneurs greater access to finance. Keywords: young entrepreneurs, potential entrepreneurs, entrepreneurial intentions, access to finance, business environment, university student

Economic Performance of the SME sector in CEE Countries: an Empirical Investigation

Small and medium enterprises are an important part of a country’s economy and are a significant source for creating value added, employment, innovation and economic growth. Because of this improving their performance is a major concern of the specialists in the field. Through this paper we intend to evaluate the evolution of the SMEs performance between 2008 and 2014, but also to determine the factors that are influencing the growth of the value added of SMEs in the Central and Eastern European countries. In order to achieve the objectives proposed we use as methods the comparison of indicators and multiple linear regression models. The results obtained show that a part of the considered macroeconomic performance indicators, such as: total tax rate, exports of goods and services and private final consumption are statistically significant and have a strong influence on the SMEs performance. Also we observe important differences according to firm size

Improving the Competitiveness in CEE Countries by Sustaining the Development of Financial Market

Through this paper we propose to realize an analysis of the global competitiveness index for the Central and Eastern European countries. In order to determine the competitiveness of a country we analyze the main factors that are influencing it. The objective of the paper is to identify if a developed financial market can improve the global competitiveness of countries. Also, as a second objective, we propose to identify which are the main problems faced by the CEE countries in increasing their competitiveness. The results of the paper show that: Estonia, Czech Republic and Slovakia are the countries with the best developed financial market from CEE and are best ranked by the competitiveness index. Also, the countries with problems in the development of financial markets are Hungary and Slovenia. Slovenia is ranked the last from the ten analyzed countries for all sub-indexes. In order to increase their global competitiveness, the countries from CEE have to improve the sector of institutions, labour market efficiency, health and primary education, business sophistication and innovation

Access to Finance of SMEs in CEE Countries and Supportive Measures

The access to finance is very important for the proper functioning and development of the enterprises. But, unfortunately, the access to finance is one of the major problems faced by the SMEs from all the European Union countries. Moreover, the recent financial crisis has brought even more challenges for these enterprises, because the deteriorating macroeconomic environmentand the uncertainty about the macroeconomic outlook caused creditors to show a greater reluctance in lending to these enterprises.Thus, the objective of our paper is to analyze the problems faced by the SMEs from ten Central and Eastern European (CEE) countries when trying to obtain the financial resources they need in current times, after the recent financial crisis. Another objective is to highlight the reforms adopted by these countries to sustain SMEs financing.The main findings of our paper are the fact that the current financial crisis had major negative implications on SMEs' access to finance and the measures taken by the decision makers to support lending of these enterprises are not enough, they must extend, in order to achieve a level of the access to finance of SMEs similar to the one in the developed European countries

Constraints on Bank Lending to SMEs from Romania and Supportive Measures

The access to finance is indispensable for the efficient allocation of capital and the enterprise development. However, when compared with large enterprises, small and medium enterprises face many difficulties when pursuing to procure financial resources. In Romania, the financial system is focused on banks so bank loans have an overwhelming share from the resources of external finance for SMEs. However, these companies face many obstacles in terms of applying for bank loans. Thus, we may notice that some banks refuse to grant loans or increase interest rates for operational SMEs that do not offer adequate guarantees or do not have a credit history, because they have just started their activity or they have a degree of solvency that does not fall into the limits imposed by the banks in question. In crisis conditions, SMEs face increasing difficulties in contracting bank loans because the deteriorating macroeconomic environment and the uncertainty about the macroeconomic outlook causes banks to show a greater reluctance in lending to these enterprises. Our paper aims to highlight the main constraints faced by SMEs in accessing bank loans, the implications of the current crisis on SMEs' access to bank loans and the measures taken by public authorities to support bank lending to these enterprises

FINANCING POLICY OF FIRMS IN THE CONTEXT OF CRISIS-INDUCED VULNERABILITIES

Our study analyses the changes in the financial structure of the firms in the context of the vulnerabilities induced by the financial crisis. The study show that there have been registered a reconfiguration of firms’ financial structure which has triggered an increase in their financial fragility and vulnerability to crises. The results obtained confirm that the effects of financing differ depending on the economic conditions in particular period (normal periods and crisis periods). In tranquil times solvency is more important for the firms than liquidity. After crisis, the firms became more cautious regarding liquidity, solvency and the prospect of securing long-term financial balance. These firms have abandoned the objective of maximizing the positive effects of debt financing adopting a more prudent financing

Do Tax Rates Matter for Entrepreneurial Motivations? An Empirical Approach

There are a number of factors that can hinder the path of entrepreneurship development and the literature highlighted the fact that taxes are one of the most important barriers for entrepreneurs. This paper aims at identifying the relationship between tax rates and entrepreneurship and to establish the impact of tax rates on entrepreneurs considering their motivations (necessity, opportunity or improvement-driven opportunity). The research focuses on a sample of 46 countries grouped according to their income level, for a period of eight years (2012-2019). In order to test our hypotheses, we use multiple linear regression based on balanced panel data and we consider, as dependent variables, indicators that measure entrepreneurship and entrepreneurial motivations (early-stage entrepreneurial activity, necessity-driven entrepreneurs, opportunity-driven entrepreneurs, improvement-driven opportunity entrepreneurs, and motivational index). As independent variables, we consider indicators that measure the tax rates supported by entrepreneurs (total tax and contribution rate, profit tax, labor tax and contributions, and other taxes payable by businesses). The results show that tax rates play a key role in fostering the creation of new companies. Moreover, the impact is different, depending on the entrepreneurs’ motivations. Entrepreneurs motivated by necessity are positively related to total tax and contribution rate, while those motivated by opportunity are negatively related with this indicator. Therefore, tax rates discourage the entrepreneurs that seek innovation, but they do not affect those that do not have other options to obtain the necessary income for living

Entrepreneurial Motivations in the European Union Countries: An Empirical Approach

Entrepreneurship is considered a significant determinant for the economic development of a country but is also important for new job creation and innovation. Understanding and examining the factors which affect the decision of individuals to become entrepreneurs play a significant role for the decision makers in order to identify the adequate measures that can support and develop the entrepreneurial activity. The main purpose of this paper is to identify the key factors that determine entrepreneurial motivations of individuals, but also to analyze empirically the impact of these factors for a sample of 18 countries members of the European Union, for a period between 2002 and 2015. We performed our empirical analysis using data offered by the Global Entrepreneurship Monitor and the World Bank. We used panel data regression models. As dependent variables for our econometric models, we used, alternatively, total entrepreneurial activity rate, necessity driven entrepreneurial activity, and opportunity-driven entrepreneurial activity. As regards the independent variables considered, we took into account six macroeconomic indicators and four indicators which measure the perceptions and attitudes regarding entrepreneurship. The results of the panel data regression models show that the entrepreneurial motivations are influenced by the level of economic development of a country and total tax rate (only necessity entrepreneurs), unemployment rates, inflation rates and access to financial resources. Also, all the considered perceptual indicators (fear of failure, entrepreneurial intentions, perceived capabilities, and opportunities) have a significant effect on entrepreneurship according to its motivation, but these effects differ according to the motivation of individuals. Overall, this paper emphasizes that the economic conditions from an EU country but also the perception of entrepreneurs are important determinants of entrepreneurial motivation

An empirical analysis of factors affecting competitiveness of C.E.E. countries

This paper analyses the main economic factors that are influencing the competitiveness of Central and Eastern European (C.E.E.) countries. The research was carried out on a sample of ten countries (Bulgaria, Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Romania, Slovenia and Slovakia), over the period 2004–2016. These countries were grouped by their stage of economic development, respectively: efficiency driven economies, in transition between efficiency and innovation and innovation driven economies. An econometric analysis on panel data was used, considering as a dependent variable the competitiveness of a country, quantified by the Global Competitiveness Index. As independent variables, we took into account a set of seven macroeconomic and business environment indicators which could have an impact on a country’s competitiveness. The results obtained show important differences between countries, but also some resemblance. Although all the considered countries are emerging ones, the factors that have a significant influence on the competitiveness differ significantly. Thereby, if for efficiency-driven countries, G.D.P., inflation rate, trade, labour productivity and costs are important determinants of competitiveness, for innovation-driven countries the determinants of competitiveness are: G.D.P., inflation rate, tax rate, F.D.I., trade and costs. As regards the C.E.E. countries in transition only G.D.P., inflation rate and labour productivity are determinants of competitiveness