Rural tourism development and financing in Romania: A supply-side analysis

For more than a century, and almost everywhere in the world, rural areas suffered a steady decline, due to the decrease of the real income from the agricultural activities, the lack of serious economic alternatives, and demographic issues. Rural tourism could contribute to the rural sustainable development through small local businesses valorising the natural, cultural and ethnographic resources. However, most of them need the financial support from private creditors (banks). The survey-based research conducted among banks' representatives has identified several strengths of small rural ventures, such as the small scale and the associated risks, the endurance to external shocks, the openness to market opportunities, as well as some of their weaknesses: e.g. a poor management experience, seasonality etc. We have also identified the actions necessary to be performed by these firms to attract financial resources from the banks' side, i.e. the diversification of income sources, the association and the adherence to recognized brands and maintaining a reasonable leverage ratio. It was found that the bank's size does not matter, but the nature of the bank's capital does: the private domestic banks are more willing to finance such businesses. The banks' involvement in co-financing the EU projects could be a way to foster and strengthen the rural businesses.