Possibilities of raising long-term financial resources in transforming economic

conference paper

English

Restructuring of economy is an inevitable condition of the growth of its efficiency. Only very few cases of restructuring can be executed without new investments into technologies, development and implementation of new products, market research etc. The greatest problem of the execution of new investments is the ensuring of their financing. The cause of this status is an insufficient level of forming of the financial sources by own business activity. Inter-yearly the number of the profitable companies grows; however, the average reached profit ratio of the own capital is low. Under such situation is the financing of investments dependent upon the availability of the external sources of financing. For transforming economic – such as in the Czech Republic – is typical the low effectiveness of the capital market. Capital market is not able to sufficiently motivate the potential investors because it does not ensure them gaining corresponding with the undergone risk. When we come out from the conditions of the Czech Republic the capital market is not able to ensure the liquidity of the commercial papers possessed by the investors. This fact to a large extent impairs business success in raising financial resources at the capital market. Low effectiveness of capital market is one of the decisive reasons of strong dependence of economy upon the bank financing. For the illustration we can mention the following data: total volume of issued credits in year 1996 reached the level of 70 % of gross domestic product within the average credit rate from the credit in the amount of 12,54 % p.a. High credit loading of companies and at the same time their low efficiency resulted in the growth of the number of credits after the maturity date in the bank balances. Consequently, the issuing of credits was rather restricted: in year 1999 dropped the ratio of issued credits to gross domestic product (even within inter-year drop of gross domestic product) to the level of 64 %, while the average interest rate from the credit was 8,7 %. Under this situation are the companies with perspective business intentions forced to seek for alternative forms of financing. One of them is financing via venture capital. In years 1995-2000 in the Czech Republic were executed totally over 80 investments, which can be considered as the investments of the venture capital. In the submitted thesis I am interested in the question of the experiences with the activity of venture capital in the Czech Republic

restructuring of economy, capital maket, venture capital

REŽŇÁKOVÁ, M.

1. 1. 2002

Vilnius University

Vilnius

XX

Dollection of conference papers "International Business in Transition Economies", Volume B

217-227

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