Sources of Funding of Central and Eastern European Business: Comparative Aspects and Impact Factors

In this paper I analyze the proportion of capital formation for investment and working capital financing on enterprises that operate in several countries in Central and Eastern Europe: Bulgaria, Czech Republic, Poland, Romania, Slovakia, Slovenia and Hungary, using Enterprise Surveys data recently compiled by the World Bank. Statistical analysis, taking into account the firms size, in 2005 and 2009, reflects mainly the usage of internal resources, more tnan 45%, to finance both investment and operating needs. Loans are another important funding source, but the proportion does not exceed 40%. The equity funds are the least practiced for investment financing. Such ratios for investment and working capital financing are consistent with the peckong-order theory of financial structure, emphasizing the low cost of self-financing, followed by the loans, respectively, of new contributions from shareholders.