Publisher's Synopsis
This paper is based on a research programme funded under the EU Phase ACE programme which has examined the difficulty for small- and medium-sized firms in financing the volatile part of their balance sheet that runs from short-life capital assets through stocks to debtors and liquid reserves. By and large, the smaller the firm the more critical is the issue of short-term financing. Further up the firm size scale, more and more provision is subject to choice of self-provision. For that reason, the research has concentrated on the SME sector, although larger firms, as clients of a rather different palette of financial provision, have had to be considered.;For the larger countries, namely: Bulgaria, Czech Republic, Hungary and Romania, 100 companies were surveyed and, in Slovenia, 60 companies co-operated. In Greece, the other participating EU country, 40 firms were studied, comprising a mix of enterprises, finance providers and intermediaries, mainly to provide relevant comparisons with the more liberalized economies.;Generally, in the economies under transition, the economic and political environment is becoming more stable with increased facility for enterprise development. That development, however, remains rather uneven, particularly in respect of the financial environment. Large enterprises remain the prime target for financial institutions, where banks compete with one another to provide loans at reasonable rates. Banks, which have poorly developed risk assessment skills, have little understanding of the SME sector. Financing instruments available are often inappropriate to the needs of the SME sector. Where appropriate, instruments do exist, complex application procedures often result in poor take-up rates. This situation is compounded by the poor grasp of financial management generally to be found within the enterprises themselves.
