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.