Publication overview

Is lack of funds the main obstacle to growth?

Abstract

This paper discusses the shortcomings of the financial system in the countries of central and eastern Europe and their implications in terms of the severity of the liquidity constraint for SMEs in transition. The paper also analyses the fundamental principles on which EBRD policy to finance SMEs is based. These principles are: a preference for reaching the SMEs via local financial intermediaries; a commercial approach to the provision of finance; and lastly a focus on development of the local financial system as a whole. The paper also outlines the various financial instruments so far employed by the EBRD and presents selected case studies.