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The Main Changes in Financial Behaviour of Firms in Transition Economy: An Estonian Case

Author

Listed:
  • Kaja Lutsoja

    (Department of Economics at Tallinn University of Technology)

  • Margus Lutsoja

Abstract

The main objective of this paper is to analyze main changes of financial behaviour of Estonian companies in the period of economic transition in Estonia from 1994 to 2002. Empirical results of Estonian firmsí interview study, undertaken annually during 1994-2003, are presented in the paper. Other sources used in preparation of this paper are derived from publicly disclosed statistics of financial institutions and different financial instruments. The analyze concentrates on informal borrowing and lending in comparison of average interest rate being applicable on official lending from Estonian commercial banks. There exists strong tendency of decrease of informal lending and borrowing. If the informal borrowing was mentioned as an important source of financing in the questionnaires of mid-1990, it has become insignificant in last questionnaires. The same can be seen in lending to own employees together with increase in availability of the loans to ìordinaryî people the lending from employer has decreased.

Suggested Citation

  • Kaja Lutsoja & Margus Lutsoja, 2004. "The Main Changes in Financial Behaviour of Firms in Transition Economy: An Estonian Case," Working Papers 113, Tallinn School of Economics and Business Administration, Tallinn University of Technology.
    • Handle: RePEc:ttu:wpaper:113
    Note: Support from the Estonian Science Foundation (project 5185) is greatly acknowledged by authors of the paper.
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    More about this item

    Keywords

    firmsí financial behaviour; neoclassical theory; post-Keynesian theory sources of financing; contractual obligations; payment terms.;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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