The Dynamics of Enterprise Financing in New EU Member. States in Comparative Perspective: the Aftermath of the Crisis

This study employs Enterprise Survey data to analyze business environment constraints and financing sources for investment for Romanian and Bulgarian companies at the end of 2009 and investigates the change in financing sources after the global financial crisis relative to a pre-crisis period (2005). The study also investigates whether the ownership structure of a firm affects its ability to finance investment and obtain capital. It is found that Romanian enterprises are generally more confronted with business constraints than Bulgarian companies and that the three main areas of concern for Romanian enterprises are Tax Rates, Workforce Education and Access to Finance. In addition, we find evidence that in both countries foreign-owned companies find access to finance less of a constraint that companies with domestic ownership do, but curiously they do not access external financing sources as much as companies with domestic capital. In fact, in both countries companies with foreign capital rely more on internal-generated sources and less on debt financing than domestic-owned enterprises. Relative to the pre-crisis period, at the end of 2009 Romanian companies rely less on internal-generated funds, while they increase their use of bank debt, supplier/consumer credits and equity financing.