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Leverage and foreign ownership in Hungary


Author Info

  • Ágnes Csermely

    (Magyar Nemzeti Bank)

  • János Vincze

    (Magyar Nemzeti Bank (at the time of writing the study))


In this study enterprise leverage in Hungary is analysed with particular emphasis on the relationship between foreign equity investment and leverage. We examine the hypothesis according to which attracting foreign equity capital relatively early in the transition process might have resulted in relaxing the borrowing constraint for enterprises. The regression analysis reported shows support for this hypothesis. There exist indications that some progress towards the „equilibrium” financing configuration has taken place. Also we have been able to re produce some previous results of the literature concerning leverage in general. We compare the determinants of leverage in Hungary with those in industrialised and other transition economies, and find some interesting differences. A curious finding is that sectoral leverage levels have not followed industrial country patterns so far.

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Bibliographic Info

Paper provided by Magyar Nemzeti Bank (the central bank of Hungary) in its series MNB Working Papers with number 1999/1.

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Length: 32 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:mnb:wpaper:1999/1

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Cited by:
  1. Köke, Jens & Salem, Tanja, 2000. "Corporate finance and restructuring: evidence from Central and Eastern Europe," ZEW Discussion Papers 00-21, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Ozsvald, Éva & Iwasaki, Ichiro & Bélyácz, Iván, 2005. "Corporate governance in transition economies. Part 2: The case of Hungary," Discussion Paper Series b31, Institute of Economic Research, Hitotsubashi University.
  3. Calin Valsan, 2005. "The Determinants of Borrowing by Newly Exchange-listed Firms in Romania: When Adverse Selection Meets Cronyism," Post-Communist Economies, Taylor & Francis Journals, vol. 17(1), pages 109-123.


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