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Primary Sources of Corporate Investment in Hungary

Author

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  • Katona Klára

    (Faculty of Law and Political Sciences, Pázmány Péter Catholic University, Budapest, Hungary)

Abstract

This research aims to reveal how Hungarian companies have financed investments over the last two decades. Which financing strategy characterized them: was internal capital accumulation or external resources, such as bank loans or foreign capital the primary source of corporate investments? The study gives an overview of the conditions typical in the Hungarian financing and capital market over the last 25 years through an empirical analysis. Using a linear regression model, the paper examines the main investments sources among the top 5000 Hungarian firms according to revenues between 1996 and 2014. The model proved that the effect of loans in financing investments was significant and positive in all examined firms, independently from their ownership in the whole period. The rate of indebtedness of foreign companies was mainly attributable to local bank credits and not loans granted by mother companies.

Suggested Citation

  • Katona Klára, 2017. "Primary Sources of Corporate Investment in Hungary," Scientific Annals of Economics and Business, Sciendo, vol. 64(2), pages 215-232, June.
    • Handle: RePEc:vrs:aicuec:v:64:y:2017:i:2:p:215-232:n:6
    DOI: 10.1515/saeb-2017-0014
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