Prof Anthony Bartzokas addresses CEIBIEM
In June 2015, Professor Anthony Bartzokas, Board Director of European Bank for Reconstruction and Development spoke to us about ‘Capital Markets and Innovation Financing in Transition Economies’.
Since the global financial crisis, EBRD countries of operation are lagging behind emerging economies, in terms of economic growth and total factor productivity growth. These economies are being confronted with a negative “transition premium”. In fact, the imbalance between supply and demand for capital is most pronounced in sectors where companies need significant external financing to grow. This environment favours companies that are capital efficient, with high credit ratings and large balance sheets to use as a competitive asset in the market. SMEs (and business creation) are more likely to be affected by excessive bank risk aversion. Thus, the lack of innovation dynamics is becoming a major transition gap. In response to these challenges, a reliable supply of reasonably-priced finance is important for entrepreneurial activity and innovation.
Dr Bartzokas discussed the extent of the problem and the potential role of long term investors. He drew on the EBRD Transition Report for 2014 and on the experience of the EBRD Knowledge Economy and Innovation Financing Initiative. Download a copy of his presentation here.