The determinants of access to finance: evidence for transition economies

Abstract

Charles University in Prague Faculty of Social Sciences Institute of Economic Studies MASTER THESIS The determinants of access to finance. Evidence for transition economies Author: Alina Cazachevici Supervisor: Roman Horvath, Ph.D. Academic Year: 2012/2013 Abstract The thesis provides an empirical analysis of impact of country-level and firm-level determinants on access to finance in transition economies. Generalized Ordered Logit model is applied on survey data for transition countries, combined with financial market indicators. The results show that higher concentration in banking sector, as well as higher financial deepening have a positive impact on access to finance, while volatile macroeconomic environment, higher implication of foreign-owned and state- owned banks seems to be perceived as increasing obstacles in accessing external financing. Combining indexes for liberalization in banking sector and liberalization of securities markets proved that before liberalization process firms had better access to finance. One of the possible explanations is that before liberalization state banks were forced by politicians to issue more loans, while after reforms the political pressure was removed, imposing stricter conditions for loan granting. Inclusion of corruption variable yields expectable results that...