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Leverage and foreign ownership in Hungary

Listed author(s):
  • 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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Paper provided by Magyar Nemzeti Bank (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
Handle: RePEc:mnb:wpaper:1999/1
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