Leseprobe
Inhaltsverzeichnis
Vorwort
1. The Relationship between the concentration of the banking Sector and the loans provided to the SME
Ing. Iveta Řepková / Karvina, Czech Republic
1.1 Introduction
1.2 Concentration and its measures
1.3 Concentration of the Czech banking sector
1.4 Credits granted to small and medium sized enterprises
1.5 Relation between the concentration of the banking sector and loans granted to SME
1.6 Conclusion
2. Socially responsible investing in SMEs
Ing. Pavel Adámek / Karvina, Czech Republic
2.1 Introduction
2.2 Actual approach of the SRI in EU
2.3 The ability of European SMEs to gain access to capital
2.4 Situation in Czech Republic (relation between SRI and SMEs)
2.5 Conclusion
3. The Impact of the Payment Services Directive on SMEs in the Czech Republic
Ing. Rostislav Šárek / Karvina, Czech Republic
4. Subventions of small and medium sized companies in Business Incubators
Ing. Lucie Veličková / Ostrava, Czech Republic
4.1 Objectives
4.2 Methodology
4.3 Discussion
4.4 Conclusion
5. Clusters and possibilities of development SME
Ing. Petr Němčík / Ostrava, Czech Republic
5.1 Introduction
5.2 Definition of the term of a cluster
5.3 Historic development of the cluster concept
5.4 Financial support of clusters in the Czech Republic
5.5 Clusters in the conditions of the Czech Republic
5.6 Contributions of clusters for firms, higher education institutions and regional self-governments
5.7 Objectives of clusters
5.8 Competitiveness of enterprises, clusters and regions
5.9 Selected aspects of cluster development
5.10 Conclusion
6. Legal aspects of state aid for small and medium enterprise in Poland
Hanna Rosiak / Wrocław, Poland
6.1 Introduction to the Polish small and medium-sized enterprises (SME) sector
6.2 Polish state aid and its legal basis
6.3 Conclusions
7. Import rates in small and large open economy
Nadezda Ovcharenko / Moscow, Russia
8. Mission Related Investments: a Valuation Approach
PhD Tomáš Krabec / Mlada Boleslav, Czech Republic
8.1 Introduction
8.2 Mission Related Investments
8.3 Implications for the Basis of Value
9. Wie sicher sind Einlagen bei russischen Banken?
Prof. Dr. Fritz-René Grabau / Madgeburg, Germany
9.1 Einleitung
9.2 Europäische Banken in der Finanz- und Wirtschaftskrise
9.3 Einlagensicherung in Deutschland
9.4 Die russischen Banken
9.5 Einlagensicherungsfond
10. Bewertung von Kreditsicherheiten bei KMU
A. Vladimirowitsch Lisichkin / Kislowodsk, Russia
10.1 Bürgschaft
10.2 Garantie
10.3 Grundpfandrechte – Hypothek und Grundschuld
10.4 Sicherungsabtretung
10.5 Sicherungsübereignung
10.6 Bewertung
10.7 Permanente Sicherheitsbeobachtung
11. Finanzierung von KMU in der Automobilbranche V. Bosijanoy / Zaparoshje, Ukraine
11.1 Beteiligungsfinanzierung kann in zwei Arten erfolgen
11.2 Kurzfristige Fremdfinanzierung
11.3 Langfristige Fremdfinanzierung
11.4 Innenfinanzierung
12. Chancen und Risiken einer Direktinvestition in der Ukraine – Korruption und Branchenanalyse
Svetlana Makowski / Saparoshje, Ukraine
12.1 Einführung
12.2 Korruption
12.3 Branchenanalyse
12.4 Zusammenfassende Beurteilung der Branchenanalyse – Chancen
13. Cost Claims nach FIDIC D. Gergova; M. Ivanyuk; A. Malatschenko / Kaliningrad, Russia unter Mitarbeit von Prof. Dr. I. Hundt / Dresden, Germany
14. Capital Market and Bank Financing of Non-Financial Companies in the CEE Countries: Selected Issues
PhD Romana Nývltová / Mlada Boleslav, Czech Republic
14.1 Introduction
14.2 Financial Systems Classification
14.3 CEE Countries’ Financial Systems
14.4 Implications for CEE Countries and Local Companies
15. Reengineering of the Company Russian Railways to Process Management
Mikhail Isakov / Moscow, Russia
15.1 The Process Management
15.2 Conclusion
16. Unternehmensfinanzierung und Kreditprüfung
S.D. Maksimenko und A.S. Boltiwetz / Kiew, Russia
16.1 Problemstellung
16.2 Kreditwürdigkeitsprüfung
16.3 Risikobetrachtung
16.4 Vertrauensverhältnis zwischen Bank und Kunde
17. Finanzierung von kleinen und mittleren Unternehmen
Mgr Malgorzata Urbanowicz / Poznan, Poland
17.1 Charakteristik der Quellen der Finanzierung von kleinen und mittleren Unternehmen
17.2 Bedeutung der Rechtsform des Unternehmens
17.3 Äußere Quellen der Finanzierung von kleinen und mittleren Unternehmen
18. Erneuerbare Energien in Russland – Ein Schritt in die Zukunft!
Ilya Barbashin / Perm, Russia
18.1 Wirtschaftliche Potentiale
18.2 Windkraft
18.3 Solarenergie
18.4 Geothermie
18.5 Meeresenergie
18.6 Biomasse
18.7 Gruben-, Deponie- und Klärgas
18.8 Fazit
19. Untersuchung der Aussagekraft anerkannter Unternehmens- bewertungsmodelle
Cornelia Höntzsch / Dresden, Germany
19.1 Planung und Prognose der Zahlungsüberschüsse
19.2 Kapitalisierungszinssatz
19.3 Der risikolose Basiszins
19.4 Die Marktrisikoprämie
19.5 Der Betafaktor
19.6 Fazit zur Ermittlung des Kapitalisierungszinssatzes
19.7 Ausweg aus dem Bewertungsdilemma?
19.8 Zusammenfassung
20. The human capital strategy in a small company
Pokusaev Oleg / Moscow, Russia
21. Probleme der KMU-Finanzierung in Russland
Dr. V.E.Zarembo / Saint Petersburg, Russia
22. The competitiveness of a railway transport company
Vladimir Zhakov unter Mitarbeit von Prof. Dr. Tereshina / Moscow, Russia
22.1 The transport market as a sphere of formation of competitive relations.
22.2 The organization of transportation process as the factor of management of competitiveness of a railway transport company.
23. Auswirkungen der Eigenkapitalvorschriften im Rahmen von BASEL II für KMU
Prof. Dr. Wolfgang Ortmanns / Dresden, Germany
Vorwort
Die Fakultät Wirtschaftswissenschaften der Hochschule für Technik und Wirtschaft Dresden führte am 20. und 21. November 2009 eine Konferenz zum Thema „Finanzierung von KMU in Osteuropa“ durch.
Wissenschaftliche Ergebnisse bezüglich des Themas Finanzierung, vor allem die Bewertung von Finanzierungsalternativen und die sich daraus ergebenden rechtlichen, steuerrechtlichen und bilanziellen Problemstellungen, Auswirkungen sowie Sicherungsmethoden wurden systematisch und praxisnah dargestellt. Insbesondere wurden die Voraussetzungen für Handelsgeschäfte mit Partnern in Osteuropa unter dem Schwerpunkt Finanzierung dargestellt und entsprechende Chancen aber auch die damit verbundenen Risiken aufgezeigt.
Die Hochschule für Technik und Wirtschaft Dresden bezog junge Wissenschaftler und Praktiker aus Institutionen, von Partnerhochschulen und Universitäten aus Russland, Polen, Tschechien und der Ukraine ein, um so die Thematik aus Sicht mehrerer Länder zu erörtern.
Der vorliegende Konferenzband enthält Vorträge, eingereichte Diskussionsbeiträge und zu einigen Themen lediglich die Präsentationen der Vorträge. Es bleibt abschließend der Wunsch nach einer weiten Verbreitung der Konferenzmaterialien zum praktischen Nutzen weiterer Interessenten an gemeinsamen wirtschaftlichen Tätigkeiten in Osteuropa.
Halle, im Dezember 2009
Prof. Dr. Fritz-René Grabau
Grabau-Stiftung Halle
Schriftenreihe der Fritz & Renate Grabau Stiftung
Die Fritz und Renate Grabau Stiftung dient der Förderung von Wissenschaft, Forschung und Bildung, Kunst und Kultur sowie der Völkerverständigung. Die Förderung erfolgt durch die Pflege der internationalen und wissenschaftlichen Zusammenarbeit und die Vermittlung eines umfassenden Deutschlandbildes durch Informationen und Veranstaltungen über das kulturelle, wissenschaftliche, gesellschaftliche und politische Leben. Die Förderung richtet sich vorwiegend an den kulturellen und wissenschaftlichen Nachwuchs der als Multiplikator auf allen gesellschaftlichen Ebenen dem Satzungszweck dienlich sein kann.
Die Stiftung fördert im Rahmen ihrer satzungsmäßigen Ziele, ihrer Förderrichtlinien und ihrer finanziellen Möglichkeiten Internationale Projekte von Einzelpersonen, Instituten / Initiativen und gemeinnützigen Vereinen, die der Förderung von Wissenschaft, Forschung und Bildung, der Förderung von Kunst und Kultur sowie der Völkerverständigung dienen.
Zusammen mit dem GRIN Verlag gibt die Grabau Stiftung die vorliegende Schriftenreihe heraus. Diese greift aktuelle und grundlegende Themen auf und legt sie in vertiefender und zugleich allgemein verständlicher Form dar. Sie leistet damit Beiträge zur Diskussion von politischen und sozialen, wirtschaftlichen und kulturellen Grundsatzfragen.
Redaktion der Schriftenreihe
Prof. Dr. Irina Hundt
Maybachstr. 1
06112 Halle/Saale
Sammelband
Finanzierung von kleinen und mittleren Unternehmen in Osteuropa
1. The Relationship between the concentration of the banking Sector and the loans provided to the SME
Ing. Iveta Řepková / Karvina, Czech Republic
1.1 Introduction
The goal of the article is to analyze the concentration in the Czech banking sector and its impact to provide credits to SME. First of all I will explain the concentration and its measures of particular indicators of concentration. In the next chapter I will analyze the concentration ofCzech banking sector in the year of 2000 to 2007 and the concentration of the market ofcredits for SME. The banking sector is represented by three largest banks – Česká spořitelna, ČSOB and Komerční banka. I will provide an evaluation of the concentration using the concentration ratio and the HHI. Furthermore I will outline the development of loaned credits to SME in the above mentioned period and will provide a correlation between theconcentration of banking sector and the volume of granted credits.
1.2 Concentration and its measures
The importance of the concentration indicators comes from the ability to determine the structure of the market. Hence are often used in structural models, which explain the competition in thebanking sector caused by the market structure. The indicators of the concentration are able to show the changes in the concentration as a result of entering the bank into the market or its business operations (merging, acquisition).
The structure of concentration indicators can be discrete or cumulative. Concentration ratio belongs to this class of discrete measures. Practical advantages of discrete measures are simplicity and limitation of required data. Cumulative or summary measures of concentration explain the entire size distribution of banks. They imply that structural changes in all parts of the distribution influence the value of the concentration index. Cumulative measures of concentration include theHerfindahl-Hirschman index (HHI), the comprehensive industrial concentration index (CCI), the Rosenbluth Index (RI) and The Hall-Tideman Index (HTI).[1]
The concentration ratio (CRk) measures the share of the largest banks in the sector. Thesimplicity of the calculation causes, that the rate is one of the mostly used ones among the concentration indicators. It represents a share of certain number of banks k, which has the biggest share of particular provided product. The indicator counts up the market shares k ofthe largest banks in the market, what could be expressed by the equation:
illustration not visible in this excerpt
(1)
CR gives the same stress on k of the largest banks and small meaning to the remaining small banks in the market. The value of the concentration ratio ranges between 0 and 1. Theoutcome closer to 1 represents, that the k bank comprised in the index, produces the whole production of the sector and the concentration is high. If the concentration ration is closer to 0, means that the market is formed by endless number of banks with similar size. If the sector is formed by n same sized banks, then we may use the following equation:
illustration not visible in this excerpt
(2)
HHI is one of the most used indicators of concentration. It helps to determine other concentration indicators as well. HHI takes into account the number of the banks in the banking sector and their market shares. It enables to value the concentration even in the case of lacking data of small banks. It decides about the influence of active companies in or out of the sector and their concrete products. The equation of HHI has the following form:
illustration not visible in this excerpt
(3)
The index is based upon hypothesis, that the impact of the bank in the sector is a function of the second square of its market share. HHI highlights the impact of the big banks, which is calculated with bigger weight than small banks. HHI result ranges between 1/n and 1. Its smallest result shows, that the market shares of all measured banks are same and are distributed to all banks evenly. The value of HHI reaches the number 1, when the banking sector contains relatively small number of banks, which cover the biggest production in their sector. In case of monopoly, HHI reaches the top 1 as the upper bound of the index.
The ministry of justice of USA splits the results of HHI index to three categories. If the measured value is up to 0.1 (1000), the market is considered for unconcentrated. The range from 0.1 to 0.18 (1000 to 1800) signalize slight concentration in the sector. High concentration is characterized by bigger volume than 0.18 (1800).[2]
1.3 Concentration of the Czech banking sector
The process of concentration in times of merging and acquisitions is determined by the market competitiveness and the need of decreasing the production costs. The market is controlled by small group of largest companies. Small and medium sized banks usually specialize in certain banking areas and using thus the existing market gap. In the region ofCentral and Eastern Europe, the process of concentration was highly depended on the way of privatization. In the Czech Republic the process of concentration is displayed by the growing influence of medium sized banks, which are continuously developing their business activities. The concentration is visible in the EU countries as well, mostly caused by the vast number of mergers and acquisitions. The concentration relates to privatization of partly owned state banks, which is usually are usually sold to new investors as their daughter companies.
Figure1 Concentration ratio of the group of the three largest banks
illustration not visible in this excerpt
Source: Author’s calculation
The lowest concentration is signified mostly in the market of credits. The biggest concentration however persists in the retail banking. The final balance of each banking groups shows about the permanent role of three largest banks with slightly decreasing share.
In the market of credits the position of three largest banks is gradually weakened. The biggest fall was recorded in years 2001-2003 due to restructuring process of privatized banks, followed by cleaning up their loan portfolios and selling their lower ranked credits.
The rest of the banks in contrary increased their share on the total amount of loaned customer credits. The growth of credits was most remarkable in the group of medium and big sized banks. In the market of credits the banking activity is still oriented to the segment of small clients. Small and medium sized banks can compete against the big banks.
The progress of the retail banking of credits was significantly used by the banks from the group of saving banks. In the market of customer deposits the concentration of three largest banks in the measured period was slightly decreasing. Big concentration of banking activity was achieved by three largest banks with biggest share on the profit and costs. In the whole period the concentration ratio reaches more than 50 % of the whole market for the three largest banks. In the market of client’s deposits is kept high concentration of three largest banks. The reason is that the clients seek safety in the big banks despite the lower interest rates comparing to competition.
Figure 2 Herfindahl-Hirschman index of the group of the three largest banks
illustration not visible in this excerpt
Source: Author’s calculation
The change in the structure of Czech banking sector and the development of the market share in the domestic banking market was registered in the values of HHI. From the graph 2 is visible, that if the banking was measured by the total assets, it could be claimed as softly concentrated sector. HHI balance amount in the period fluctuates up to value 1000 until the year 2002. It declares the unconcentration of the market. Since 2002 the HHI reduces in the market of credits meaning the competition increases. The competition was enhanced by decreasing the share of numerous groups of big banks and by opening the market for new competitor. In the market of deposits was visible, that he HHI values were decreasing. The lower competition was influenced by well spread and working branch network for saving operations. The advantage lies in the side of big banks and products supported by the state like the house savings. The market was until the year 2002 very concentrated and since 2003 the values of HHI have been decreasing. HHI and the concentration ratio of three largest banks signalize, that the concentration ratio in the banking sector has been after 2000 reducing, and one may assume, that the competitiveness of the market has risen. The situation in the Czech banking sector in the international scale is not exceptional and working competitiveness is maintained. The market of banking services is widely open. There are no regulations for entering the market. After joining the EU the local market is even more open to all European financial institutions, which may want to start business here.[3]
1.4 Credits granted to small and medium sized enterprises
The main characteristic of small and medium sized enterprises (SME) is the number ofemployees, which is claimed to be fewer than 250. These companies can be categorized togroup of very small (up to 9 employees), small (from 10 to 49 employees) and medium (from 50 to 249 employees).
Since the beginning of nineties we can follow a long trend of growth of registered SME, mostly because of the transformation process of the whole economy from central planned to market one. The last years we can see that the process is showered. However the number of service oriented companies is rising. The volume of agricultural based companies is reduced.
The discussion on the corporate sector is mostly based on analyses of large enterprises. However, as regards the number of non-financial corporations, SME sector is definitely more important (with SME accounting for 99.6% of the total). SME are usually owned by local entrepreneurs, instead of foreign owned big companies. It can be assumed, that the company activities will be depended on the domestic financial development. Their access to capital markets is very limited. Funding is increasingly derived from the domestic banking sector, respectively own resources. Approach of bank is to SME with great caution given the increased-risk segment. The financial stability of the banking sector from the perspective of finance companies has contributed significantly arise the Central Register of Credits (CRC) in October 2002, which was also an important element in managing credit risk. Banks have made available information on the credit load current and potential clients, and can better manage their credit risk portfolios. These data remain in the registry for 10 years after repayment of debt.
CNB does not provide data about the structure of loans by size of company do not, moreover, part of SME sector held innon‑financial firms in the sector of home-business. They only source of information on lending to SME in the data from CRC operated by the CNB. The paper also used publicly available data from the CNB, which usually include credit for non-financial businesses and trades.
Figure 3 Development of loans granted to SME and total loans granted
illustration not visible in this excerpt
Source: Author’s calculation
The amount of loans granted to SME from 2001 – 2003 has declined significantly, and since 2004 can be seen the growth of the amount of loans granted to SME again. The growth ofSME loans follows the trend of total granted loans that in those years fell too.
Figure 4 Proportional ratio of loans granted to the SME to total loans
illustration not visible in this excerpt
Source: Author’s calculation
The figure 4 shows that share of loans to SME to total loans granted was slowly decreasing in the years analyzed. The main funding source of SME comes from bank loans. That confirms the fact that the most important components in the structure of assets of the Czech banking sector are long-term loans to businesses. The Czech economy is characterized by a high ratio between the credits granted and the creation of GDP. Economic recession in 2000 was replaced by a slight recovery, which continued in 2001.
Right up until the end of 2000, the reduced lending activity – resulting from the shortage of creditworthy projects and from the cautious approach of banks (which are still struggling with the consequences of difficult-to-enforce credits granted at the beginning of the 1990s) – had led to a persistent decline in credits as a percentage of total assets. However, the results from the end of 2001 suggest a modest recovery in lending related to the upward trend of the Czech economy.[4]
Lending to SME was flat or falling year on year up to 2003. In firms this was due to generally worse economic performance, whereas in foreign controlled corporations domestic resources were replaced by foreign funds obtained directly from their owners. Lending to small businesses is being hampered by information asymmetry and by the fact that this sector has the highest proportion of bad loans. Within the corporate sector, private domestic corporations are contributing most to credit growth, but even they are being constrained by persisting information asymmetry and a still short credit history. The massive declines recorded in 2001–2002 were also due to transfers of bad loans from banks to the Czech Consolidation Agency. Despite this, we can detect pro-cyclical, slightly lagged corporate lending behaviour. Another factor underlying the slowdown in lending was the use of alternative sources of financing by corporations.[5]
According to the Central Register of Credits, the loan growth in 2005 was due mainly to loans to SME with 10–99 employees. Lending to micro-enterprises (1–9 employees) saw relatively low growth. The tendency of faster growth in lending to smaller enterprises may suggest agradual elimination of their liquidity restrictions[6], associated with their lower indebtedness as measured by the ratio of bank loans to sales. The low growth in loans to micro-enterprises is linked with the lower quality of such loans.
The rate of new defaults on loans to enterprises broken down by number of employees indicates that the degree of risk of SME is significantly higher than that of large enterprises with more than 250 employees. Overall, the current increase in lending to SME seems to be natural, being associated with their improving financial indicators.[7]
In 2006, the rapid tempo of credit growth is slowing. The increased tempo of previous years was due to a low comparative base and the decrease of the interest rates. The reason was the change in bank’s policy, because they have been interested more in offering the loans. They have substantially improved the quality of its loan proposal and have reduced the conditions for providing almost all types of loans and credits too. Since 2002, when the credit breakpoint appeared, is the growth rate of debts increasing.
The positive trends recorded for corporate financial indicators are generating a rising rate ofgrowth of loans to corporations. This growth started to pick up in 2003 and has continued rising since then, mainly due to the SME sector. The share of bank loans to SME in total loans to non-financial enterprises has gradually risen. The highest credit growth is still being recorded by small enterprises with 1−9 employees. Many banks are targeting special packages at this segment. Alongside credit to households, this segment generates most income for banks.[8]
The following figures show the evolution of concentration on the loan market of SME.
Figure 5 Concentration ratio of the loans granted to SME and total loans granted
illustration not visible in this excerpt
Source: Author’s calculation
The figure 5 shows that on the loan market of SME is the share of the three largest banks very small. The concentration ratio of those banks ranges from 28 % to 38 %. Whereas the concentration ratio of the three largest banks to total loans reaches values around 50 %.
Figure 6 Herfindahl-Hirschman index of the loans granted to SME and granted loans total
illustration not visible in this excerpt
Source: Author’s calculation
In comparison with the total loan market where the value of HHI is about 800, results of HHI on the loan market of SME confirm a very low degree of concentration of the three largest banks. Values achieved in all years are significantly below 1000, which can be described as non-concentrated sector.
Figure 7 Debt ratio of SME (% of GDP)
illustration not visible in this excerpt
Source: Adapted from CNB
The sector's debt continued rising, the growth rate of loans granted to SME decreased over the year 2007. This may indicate a future downswing in corporate sector performance associated with the expected weakening of economic activity due to global and domestic factors.
Despite the increase in the corporate debt-to-GDP ratio, this indicator for the Czech Republic is still half that of the EU12 countries and since 2001 has been roughly at the same level as in the USA, where, however, corporations are traditionally financed more through the capital market.[9]
Figure 8 Credit growth (in %)
illustration not visible in this excerpt
Source: Adapted from CNB
The figure 8 shows year-on-year growth in credit to corporations by number of employees in %. Despite non-financial corporations' relatively positive results, some signs of slowing corporate sector performance are visible. These are associated with the expected economic slowdown due to global and domestic factors. At the end of 2006 bank loans to SME had shown record annual growth rates of almost 21 %, whereas at the end of 2007 the rate returned to a more restrained figure of just over 17 %. Compared to 2006, when the growth in loans had been driven by small and medium-sized enterprises, the growth in 2007 was very heterogeneous. The fastest growth in bank loans was recorded for enterprises with 100−249 employees. Enterprises with 250 employees or more, which can rely more on cheaper sources of financing, such as the capital market or loans from their parent corporations, as usual showed the lowest growth.[10]
Figure 9 Year-on-year credit growth by sector (in %)
illustration not visible in this excerpt
Source: Adapted from CNB
The annual growth rate of credit granted to SME is increasing year-on-year. In mid 2003, credit growth came to positive values. The average year-on-year rate of growth between 2000 and 2002 was minus 20%, 2.5 % between 2002 and 2004 and 15.6 % between 2004 and 2007. The annual rate of growth of loans to SME at the end of2006 was 20.9 %. The rate of growth of bank loans to SME has decreased slightly in 2007 to 17 %. In international comparison, this growth rate is below the average value achieved of the European Union.
1.5 Relation between the concentration of the banking sector and loans granted to SME
The concentration of the banking sector in each year is decreasing significantly. A group ofthree largest banks reduced the proportion on the loan and deposit markets, while strengthening overall position in the proportion of total assets. Activities of whole sector are mostly concentrated in the group of the three largest banks, which have mostly over 50 % ofthe value ofthe market. Market shares of the group of the largest banks in the banking sector are decreasing slowly, despite the competition of the banking sector is strengthening and the internal structure of the banking sector is changing. In my opinion, the banking sector of the Czech Republic, represented by the three largest banks, can be described as slightly concentrated. Loans granted to SME in absolute terms are growing each year, the dynamics of growth of loans is increasing, although in 2007 is apparent a slight decline ingrowth rate of credits.
The paper cannot state that the concentration of the banking sector does have an impact on granting credits to SME. The three largest banks have approximately 35 % share on market ofcredits toSME. And although credit market concentration is generally decreasing significantly, the growth of SME credit market is variable. Competition in the segment ofcredits to SME is significant. The banks are thank to an economic growth increasingly disposed to expand funding opportunities for business activities and thus contribute to the expected profits. Equally important criterion is the possibility of competition from new players which are entering the credit market.
1.6 Conclusion
The goal of my paper was to analyze the relationship between the concentration of the banking sector and credits granted to SME. First the concept of concentration and its measurement is described. In the practical part of the paper is analyzed the concentration of the Czech banking sector using the concentration ratio and the HHI in period from 2000 to 2007. It also describes the relationship between the development of credits granted to SME and the concentration of SME credit market.
The paper suggests that loans granted to SME are more affordable with decreasing degree of concentration of the banking sector and its growing competition. The credit providing to SME, however, affect other factors too. Therefore, we cannot say that the decreasing degree of concentration does have an impact on growing the credits to SME. From the paper is also apparent that the concentration of the market of credits to SME is significantly lower than the concentration of the market of total credits.
List of References
Berger, A. N., Hannan, T. H. The Price-Concentration Relationship in Banking: AReply. The Review of Economics and Statistics, Vol. 74, No. 2. May, 1992, p. 376 - 379. ISSN 0034-6535.
BIKKER, J. A., HAAF, K. Measures of competition and concentration in the banking industry: a review of the literature. De Nederlandsche Bank. 2000, 35 p. (No ISSN).
[Bresnahan, T. F. The Oligopoly Solution Concept is Identified. Economics Letters 10, 1982, p.87 - 92. ISSN 0165-1765.
CHAN, D., SCHUMACHER, D., TRIPE, D. Bank Competition in New Zealand and Australia. Centre for Financial Studies Banking and Finance Conference, Melbourne, September 2007, 22 p. (No ISSN).
Demsetz, H., (1973), Industry structure, market rivalry and public policy.
Journal of Law and Economics, 16, No. 1, 1973, p. 1 - 10. ISSN 1572-9990.
Peltzman, S. The gains and losses from industrial concentration . Journal ofLaw and Economics, Vol. 20, No. 2. 1977, p. 229 - 263. ISSN 1572-9990.
RUTHENBERG, D. Competition in the Banking Industry: Theoretical Aspects and Empirical Evidence from Israel. In An International Perspective. 2006, p. 47. URL:< http://www.biu.ac.il/soc/ec/seminar/data/6.11.06/competition.pdf>
Annual Reports Česká Spořitelna in years 2000 - 2007
URL: <http://www.csas.cz/banka/appmanager/portal/banka?_nfpb=true&_page
Label=downloads&dtree=cs&selnod=17> [10. 10. 2009]
Annual Reports ČSOB in years 2000 - 2007
URL: <http://www.csob.cz/bankcz/cz/Csob/Vztahy-k-investorum/Vyrocni-a-pololetni-zpravy.htm> [10. 10. 2009]
Annual Reports Komerční banka in years 2000 - 2007
URL: <http://www.kb.cz/cs/com/investor/annual_reports.shtml> [10. 10. 2009]
Annual reports on banking supervisory activities 2000 – 2005
URL: <http://www.cnb.cz/en/financial_market_supervision/banking_
supervision/banking_sector/analytical_publ/publikace_rz.html> [10. 10. 2009]
Basic indicators of the banking sector
URL:<http://www.cnb.cz/en/financial_market_supervision/basic_indicators_fin_
sector/banks/index.html> [10. 10. 2009]
Financial market supervision reports in years 2006 – 2007
URL:<http://www.cnb.cz/en/financial_market_supervision/fms_reports/
index.html> [10.10. 2009]
Financial stability reports 2004 – 2007
URL: < http://www.cnb.cz/en/financial_stability/fs_reports/> [10. 10. 2009]
<http://www.cnb.cz/m2export/sites/www.cnb.cz/cs/verejnost/pro_media/tiskove_zp ravy_cnb/2005/download/Stanovisko_CNB_mat_MF_14062005.pdf> [10.10. 2009]
2. Socially responsible investing in SMEs
Ing. Pavel Adámek / Karvina, Czech Republic
2.1 Introduction
The terms “social”, “ethical”, “responsible”, “socially responsible” and “sustainable” are all used in a multitude of overlapping and competing ways. Nevertheless, the constant within this area is that sustainable and responsible investors are concerned with long-term investment, and environmental, social and governance (ESG) issues are important criteria in determining long-term investment performance. According to these tendencies it should be split into three areas:
Responsible Investment (RI) is an area developing particularly among the institutional investors and remains most connected to the mainstream financial community. Responsible investors take into consideration the long-term influence of extra financial factors such as environmental, social and governance (ESG) issues in their investment decision-making. They integrate ESG factors into their stock portfolio analysis and management, bringing together social and sustainability indicators with traditional financial analysis.
Socially Responsible Investment (SRI) is an important area for the retail financial sector and may incorporate ESG issues as well as criteria more closely linked to a values-based approach. For example, it can involve the application of pre-determined social or environmental values to investment selection. Investors choose to exclude or select particular companies or sectors because of their impact on the environment or stakeholders.
Sustainable Investment (SI) is a growing area where investors align their investments with emerging environmental and social realities. This area brings together those in the financial sector committed to the sustainability imperative along with those interested by the investment opportunities that the ongoing shift in regulations and market practices are creating[11]. A good example of this would be High Net Worth Individuals (HNWI)[12] choosing to invest in thematic funds (clean energy, water, etc.) because of their financial and sustainable returns prospects.
Accordingly to Eurosif[13] SRI means: „A generic term covering ethical investments, responsible investments, sustainable investments, and any other investment process that combines investors’ financial objectives with their concerns about environmental, social and governance (ESG) issues”.
A key challenge for sustainable and responsible investors is in investing for the long-term while facing short-term pressures. There is rarely a simple answer to the complicated puzzle of combining money-making with ‘sustainability’ criteria. For example, in evaluating a company’s ESG issues, some investors will find the environmental policies to be the key input while others will point to the company’s human rights practices as the critical issue. Therefore there are multiple approaches for conducting SRI.
2.2 Actual approach of the SRI in EU
Sustainable & Responsible Investment (SRI) is an investment strategy that meets both financial and values-driven needs. These same values drive a developing sustainability agenda that creates business risks and opportunities. The inclusion of sustainability analysis into the core investment process thus aims to yield both investment and ethical value. For this to hold true the SRI process must be able to identify, and weight properly, the most important issues in this developing social and political agenda.
There exist number of an approaches and one of the important should be developed by Fortis Investments´ proprietary[14] with a tool that allows us to identify the most important sustainability issues, and highlights consequent investment risks and opportunities.
To analysing the issues of our concern fall into three categories: Environmental (e.g. climate change, waste), Social (e.g. human rights, health and safety), and Governance (e.g. transparency, corruption).
For identifying the related investment risks and opportunities by monitoring those issues and their underlying drivers, there exist the sustainability as opportunity themes: Clean & Efficient Energy, Water & Pollution Control, Organic Food, Health Technology, Fair Trade, Green Materials & Buildings and Waste & Recycling Technologies.
The role of EUROSIF (European Social Investment Forum)
Eurosif is a pan-European group whose mission is to Address Sustainability through Financial Markets. Current member affiliates of Eurosif include pension funds, financial service providers, academic institutes, research associations and NGO’s. Current member affiliates of Eurosif include pension funds, financial service providers, academic institutes, research associations and NGO' s. The association is a not-for-profit entity that represents assets totalling over €1 trillion through its affiliate membership.[15]
Eurosif’s proprietary “Fortis Sustainability Radar” is the core framework for all SRI funds. The individual SRI funds differ in terms of SRI approach, regional focus, and other criteria. Businesses face a constantly evolving social and political agenda that is ultimately driven by society’s values and shifting understanding of key trends. A range of factors including new scientific evidence, developing public opinion and changing political priorities form a complex landscape.
Importantly, ESG issues are not static but tend to develop towards legislation driven by new scientific evidence, NGO activities and changing political landscapes, public opinion and consumption patterns. The figure below shows selected ESG issues in different phases.
Figure 1: ESG issues in process of developing from “emerging to establishing”
illustration not visible in this excerpt
Source: http://www.sri.fortis.com/sri_sust_radar_agenda.asp
The key features and indicators of each phase are outlined into:
1. Emerging phase - low scientific evidence of and consensus on the social and environmental impact; uncertainty as to how policy makers will tackle the issue; risks and opportunities cannot be quantified.
2. Momentum phase - strong scientific evidence & consensus; high media attention and NGO Activity; strong political momentum and increasing clarity of future policy frameworks; likely corporate winners and losers can be identified; feasible for ESG investment specialists to quantify risks and opportunities; the market tends to misprice risk sand opportunities.
3. Established phase - regulations and norms are established; risks and opportunities are identified and integrated in mainstream analysts’ valuation models; the market efficiently prices companies in relation to these issues.
The momentum phase is the most important phase for SRI investors. This is where market mispricing on ESG issues occurs, which we can exploit by employing our specialist understanding on ESG issues and their underlying dynamics. SRI moves closer to financial mainstream
The socially responsible investment market has grown considerably in the past few years and, now valued at €1,000bn in Europe, shows signs of moving closer to the financial and corporate mainstream. Across Europe we could see the rising SRI strategies involved more business and other partners. One of the biggest factors driving the shift is public awareness of climate change, which is having an impact on investment values and leading to a more widespread use of SRI strategies by institutional investors.
Statement on Environmental and Social Principles and Standards[16]
The EIB[17] approach to environmental sustainability – as well as the closely related concept of social well-being – is described in “The EIB Statement of Environmental and Social Principles and Standards”. During 2008 the Statement was revised and a public consultation was held to collect comments from civil society. The constructive contribution to this consultation of civil society organisations, in particular the NGOs that traditionally scrutinise the Bank, was very much appreciated by the Bank and resulted in a statement that provides a much greater sense of urgency about the problems of climate change, expands the social dimensions of sustainable development and recognises the importance of biodiversity.
Following the approval on 3 February 2009 of the EIB’s new Environmental and Social Statement, the Management Committee decided to review the structure of the Projects Directorate with the aim of increasing the Bank’s ability to deliver sustainable projects. The proposed changes focus on the Environmental and Social Office, which replaces the Sustainable Development Unit.
2.3 The ability of European SMEs to gain access to capital
The European Union provides support to European SMEs. This is available in different forms such as grants, loans and, in some cases, guarantees. Support is available either directly or through programmes managed at national or regional level, such as the European Union’s Structural Funds. SMEs can also benefit from a series of non-financial assistance measures in the form of programmes and business support services. For brief introduction is important to state schemes which have been divided into the following four categories:[18]
1.Thematic funding opportunities with specific objectives - environment, research, education. SMEs or other organisations can usually apply directly for the programmes, generally on condition that they present sustainable, value-added and trans-national projects. Depending on the programme, applicants can also include industrial groupings, business associations, business support providers and/or consultants. Co-funding is the general rule: the support of the European Union usually consists of subsidies which only cover part of the costs of a project.
2. Structural funds (European Regional Development Fund and European Social Fund) are the largest Community funding instruments benefiting SMEs, through the different thematic programmes and community initiatives implemented in the regions.
3. Financial instruments - most of the financial instruments are only available indirectly, via national financial intermediaries. Many of them are managed by the European Investment Fund.
4. Support for the internationalisation of SMEs - generally consist of assistance to intermediary organisations and/or public authorities in the field of internationalisation, in order to help SMEs to access markets outside the EU.
After this brief introduction of the EU basis, the research will be concern in some specific areas which have the impact for SRI. Form there are of concern it is important to focus and more detailed to target on the possibility gain capital especially for SMEs from the investment funds. The area of the will be divided funds into three parts. Our concern will be focused on private equity and venture capital which will be more detailed. From the research area of SRI in European SMEs is possible to state and mentioned the basic;
1. Funding opportunities divided intro parts:
Environment, energy and tran sport - LIFE +; Competitiveness and Innovation Framework Programme (CIP); Marco Polo II;
Innovation and Research - The Seventh Framework Programme for Research and Technological Development pays special attention to the SMEs through its different programmes: “Co-operation” (circa €32.3 billion), “Ideas” (circa €7.5 billion), “People” (circa €4.7 billion) and “Capacities” (circa €4 billion); EUREKA – A Network for market oriented R&D;
Education and training;
Culture and media;
Employment issues - Information, consultation and social dialogue; Health and safety at work.
2. Structural Funds - European Regional Development Fund; European Social Fund; Rural Development Fund; Joint European Resources for Micro and Medium Enterprises (JEREMIE); Joint Action to Support Micro-finance Institutions in Europe – JASMINE.
3 .Financial instruments - Competitiveness and Innovation Framework Programme (CIP); European Investment Fund (EIF) own investments; European Investment Bank (EIB) loans.
The survey mentioned above could get some clear review from European help to support and developed the SRI through these four categories. For further details follow http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=4619&userservice_id=1&request.id=0.
1.1 Investment funds
There are many different ways to break down the alternative investment market into different fund types. There is the focus on EC’s convention and looked at four different markets: Hedge funds – these funds offer investors a wider range of investment and trading activities than other investment funds (such as commodities or real estate) and apply non-traditional portfolio management techniques such as through using leverage or pursuing absolute returns on their investments i.e. profits both in rising and falling markets; Private equity and venture capital funds – these funds provide investors with the opportunity to invest in non-listed companies; Real estate funds (otherwise referred to as property funds) – these funds provide investors with exposure to investments in property, land and other property related assets. Investment trusts - these funds are closed-ended investment vehicles investing in a diversified portfolio of assets that are structured as listed companies.
It is useful to consider the role that investment funds play and why it is that investors might seek to use investment funds rather than other forms of investment. There are a variety of advantages of using investment funds including diversification, cost advantages and professional management.
Start-ups and SMEs
According to the EC, 99% of all businesses in the EU are SMEs and these companies provide two-thirds of all European private sector jobs.[19] It is primarily to these types of firms that venture capital and mid-market private equity provide capital.
The European Central Bank has studied the effects of private equity investment in Europe on business creation and the importance of private equity financing to small business.[20] They concluded that countries with relatively large private equity sectors had disproportionately higher market entry (or firm start-up) than countries with lower levels of private equity funding. This is especially the case in industries where entry rates are naturally higher and/or where they are more research and development intensive.
It means that private equity in Europe has tangible and positive effects on new business creation. This was even more apparent when looking at markets with mature private equity industries. It was shown that countries with more stable and long-term private equity funding provide more incentive for entrepreneurs to create business.
Figure 2 shows the number of companies in Europe that have private equity or venture capital funding. In total, some 25,000 companies in the EU are currently financed by private equity or venture capital.
Graph 2: Private equity and venture capital funded companies in the EU
illustration not visible in this excerpt
Source: Source: Provided to CRA by the EVCA
Use of private equity and venture capital
The private equity and venture capital industry provides a source of capital for many types of companies in Europe including the character of SRI. Private equity provides capital to unlisted companies, including those that are de-listed as part of a public to private transaction. These investments range from buy-out deals (acquisition of the majority of shares in a company) to early stage investments (such as seed capital to help in start-up phase of a company), also known as venture capital.
Private equity and venture capital funds provide capital and often the management and operational expertise needed to increase value in the underlying company. In this sense, these funds provide a service and source of capital that neither bank lending nor mass shareholder equity (such as public shareholders) could provide.[21] Table 1 shows the proportion of buyout and growth investments compared to venture capital investments in 2007 and 2008.
Table 1: European private equity by investment stage (€ billion)
illustration not visible in this excerpt
Source: EVCA
Private equity funds are also very international in their use of capital raised. Hence funds that are managed in one location do not only invest in that location but invest in companies in a range of different countries. In this way countries that are neither the location of the domicile of the fund nor the location of the management of the fund receive benefits from investment in the underlying portfolio companies.
Private equity and venture capital funds have direct impacts on the real economy through their role as providers of capital to small businesses. Around 9-10 million people in the EU are currently employed by private equity and venture capital funded companies and up to 30 million are employed by a business that has received such funding in the past. As well as providing capital, AIFM[22] provide the management and operational expertise needed to increase value in the underlying portfolio company (which neither bank lending nor mass shareholder equity could provide).
Companies supported by private equity are more likely to be growing and increasing employment opportunities, although there is some evidence of declines in employment in the immediate aftermath of investments. Furthermore, private equity funded companies were found to create 6% more “greenfield” jobs than other firms.
There is little evidence to suggest that funding provided by private equity through buyouts would be drastically reduced as a result of the AIFMD. This is because non-EU funds can continue to invest in EU businesses while raising funds elsewhere supported by local offices to oversee investment opportunities. (EU managed funds already raise 46% of capital from outside the EU, suggesting switching to non-EU funds by these investors would be straightforward.)
Venture capital funded firms have high employment growth rates. In addition, a large proportion of employees funded by venture capital focus on jobs such as research and development, biotechnology and health care, and university spin-offs, which seek to innovate and are key drivers in economic growth.
The impact of AIFMD is more significant for venture capital funding relative to private equity funding as local knowledge and expertise is comparatively more important in funding start-ups than for buyouts. Therefore it is more difficult for non-EU based funds to increase investment in the EU in the short term. Any reduction in venture capital is a concern since start-ups and early stage companies are extremely important to economic growth and employment across the EU.
Funds raised by private equity
Fundraising by EU-managed private equity funds has increased substantially over the past five years. As shown in Figure 14 below, fundraising by private equity funds peaked in 2006 but has remained at a high level over the past two years. Fundraising from 2004 to 2008 totalled €357.5 billion.
Graph 2: EU private equity and venture capital fund raising (€ billion)
illustration not visible in this excerpt
Source: own research from EVCA
Private equity and venture capital funds raise money from a number of sources, including investors both within the EU and outside the EU. Graph 3 below shows a breakdown of funds raised by EU managed private equity and venture capital funds.
Graph 3: EU private equity and venture capital funds raised by investor type
illustration not visible in this excerpt
Source: Provided to CRA by the EVCA
In addition it is estimated by the EVCA that there are around 4,200 private equity and venture capital funds managed in the EU.[23]
Replacement by other sources of funding
It is clear that private equity provides a source of funding that traditional bank lending or public shareholder equity cannot fill. There are a number of explanations for this: the benefits include expertise in particular industries and markets as well as access to funds; alternative sources of funds such as banks are often unwilling to lend to SMEs due to higher uncertainty, information asymmetry and agency costs; and public listing is often not a viable choice because of the early stages of development of businesses at issue.
However, one obvious substitute for EU private equity and venture capital funds from the perspective of EU enterprise is to obtain such funding from outside Europe. It is already the case that a substantial portion of the money that is raised by European private equity funds comes from outside the EU.
SMEs Survey and the EIB’s Initiatives in favour of SMEs
The EIB Group is one of the pillars of European support for SMEs. As a whole, the EIB Group provides assistance to some 150 000 to 200 000 SMEs every year. The economic structure of the EU is characterised by the importance of the SME sector. There are over 23 million SMEs in the EU, representing 99% of all enterprises, and SMEs are responsible for more than half of the EU’s GDP and employment. Their capacity to grow and innovate is crucial for ensuring EU economic growth and competitiveness. They are, however, more exposed to financial turbulence, the business cycle and contractions in final demand. Preserving access to finance on attractive terms is therefore critical in helping them to realise their full growth potential.
EIF has provided specialised support for SMEs based on two major product lines. First, by acting as a fund of funds in the venture capital area, it has invested in funds with a specific focus on high-tech and innovative SMEs. The EIF’s total equity investments amounted to EUR 4.7bn invested in more than 280 funds at end-2008. Second, by providing guarantees for SME loan portfolios, it has shared with financial intermediaries the risk they run on their SME lending activity. The EIF’s guarantee portfolio amounted to EUR 13bn as at end-2008.
Under the Competitiveness and Innovation Programme (CIP), the European Commission mandated the EIF to invest a total of EUR 1bn of budgetary funds on its behalf in venture capital funds providing seed capital or equity to innovative SMEs with high growth potential and to issue guarantees for loan and equity portfolios, including microcredit portfolios. EIB and EIF will cover the whole spectrum of financial products needed by SMEs and midcaps to realise their full growth potential and ensure that the benefits of the support are genuinely passed onto the companies themselves.
EIB loans for SMEs
Before the crisis erupted, the EIB developed a new lending product, dubbed EIB loans for SMEs. Available since October 2008, these new loans are simpler , more flexible and more transparent, making it possible to reach a greater number of European SMEs. From the budget will be made available to small businesses in the 27 EU Member States by 2011 to help them weather the global financial storm in total EUR 30 billion. At least half of this amount will be allocated by the end of 2009.
Also one of the reasons was that EIB revealed that four types of company often have difficulty gaining access to credit. In particular: micro-companies with fewer than 10 salaried employees have difficulty finding financial products that suit their specific circumstances; “gazelles” (i.e. SMEs in a high-growth and/or transfer phase) have to manage, simultaneously, the need both to increase their equity capital and to secure medium-term financing; innovative SMEs have difficulty financing intangible acquisitions with a view to supporting their R&D or using new technologies; and SMEs’ investment in “eco-technologies” or sustainable development (e.g. in order to reduce CO2 emissions) are regarded by banks as having an abnormal risk profile.
The EIB lends money to commercial banks e.g. in Czech Republic are involved: Česká spořitelna – Erste Group, Komerční banka – Societe Generale Group, Československá Obchodní Banka, UniCredit Bank Czech Republic, Raiffeisenbank, Volksbank CZ.
All independent SMEs with fewer than 250 employees in the 27 EU Member States. The subsidiaries or holding companies of industrial groups with more than 250 workers are not eligible. Amounts are provided from very small projects to investments with a maximum cost of EUR 25 million. The EIB’s contribution cannot exceed EUR 12.5 million and also all expenditure necessary for a small business to develop, such as:
· Tangible investments: purchases of plant and equipment.
· Intangible investments: particularly the expenditure involved in R&D, building up or taking over distribution networks in domestic or other markets within the EU, taking out or buying patents, buying out a company in order to safeguard economic activity (for a buy-out cost of no more than EUR 1 million).
Advantages which create the EIB for SMEs through partner banks to on lend to SMEs the funds that it provides at favourable rates, adding an equivalent amount from their own funds. For each euro provided by the EIB the partner bank undertakes to lend at least two to SMEs, so creating a leverage effect.
EIB has interaction between the core principles of CSR[24] at the heart of its strategy, objectives and policies and SRI. The Bank aims to add value by enhancing among other things the environmental and social quality of the projects that it finances. There is important to mention the SRI-tailored product: the Climate Awareness Bond.[25] Regular EIB bonds have for some time attracted demand from SRI investors. However, in 2007 the Bank substantially widened this appeal through the issuance of a product specifically geared to the SRI market.
2.4 Situation in Czech Republic (relation between SRI and SMEs)
SMEs are the driving force of business, growth, innovation and competitiveness and play a key role in job creation. In the Czech Republic, SMEs account for 61.52% of the employment and contribute by 35.17% to the production of GDP. SMEs portion from all investment in CZ is 56 %.
From the zone of the national´s financing investment programme of Czech Republic in areas of health, social protection, culture and public administration is responsible Ministry of Finance and line ministries responsible for investments in selected eligible sectors. For the purpose of the research was chosen the last project which is focusing on SRI area and was signed in 13/10/2009. Description of project is multi-sector facility devised to support the Czech Republic's multi-annual public investment programme in priority eligible sectors, namely in health/social care, culture and public administration, through the acquisition of the government bonds. The objectives of the project are the pre-selected investment programmes aim at several objectives, such as enhancement of quality of life, effective public management and prosperity. The Project is expected to comprise schemes eligible under the Convergence objective as well as investments located in Prague (classified as a Competitiveness and Employment region) which will be justified under other EIB objectives (human capital, RDI, sustainable communities).
Proposed EIB finance is stated: up to CZK 12.4 bn. and total cost approx. CZK 25.5 bn. The project included the environmental aspects and some of the schemes may fall under the requirements laid down in the EIA Directive 85/337/EEC.[26] The Bank will request to be informed of the actions taken by the Promoter on the necessity of undertaking an EIA. Had any scheme a negative impact on an area forming part of Natura 2000 network, the Bank would require the promoter to act according to the provisions of the relevant directives as transposed into the national law.
Table 2: Finance contracts signed in the year 2009 for Czech Republic
illustration not visible in this excerpt
Source: http://www.eib.org/projects/loans/regions/european-union/cz.htm
JEREMIE as an instrument of European investment bank is implemented in the Czech Republic through the banks. For instance loan for Komercni banka in 2006 was in amount 37.5 million EUR, or in 2008 was made agreement with group of Société Générale in amount of 100 million EUR. From this programme should be also support SRI activities. That opportunity can bring lower interest rate, to not only SMEs, but also for corporations up to 3000 employees and companies owned by public sectors. The cheaper borrowings could be advantage in starting vision of Socially Responding Investing in SMEs. That instrument is possible to be used for co-financing main source of money - Structural funds, especially European Regional development fund and European social fund.
Disparities among regions of the CR are significant. Capital´s city region has 120% GDP of level of EU on the other hand all other regions are bellow limit 75% GDP and some smaller area, in case of high unemployment, are listed on special Government regulation as regions with intensive subsidy of state. There for example belong to Moravian-Silesian region and North-west Bohemia region which are still restructuring from heavy industry. Through Czechinvest are offered grants and Czech-Moravian Guarantee and Development Bank[27] are offered favored loans.
The National Strategic Reference Framework of the Czech Republic
The National Strategic Reference Framework (NSRF)[28] for 2007 - 2013 was drafted while respecting the principle of partnership in line with the Article 11 of the Council Regulation No. 1083/2006, laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No. 1260/1999 (hereinafter "General Regulation"). The Ministry for Regional Development (MRD) ensured the overall co-ordination of the preparation for the programming period of 2007 - 2013, including the preparation of the National Development Plan (NDP)[29] and the NSRF. During this process, the attention was paid to ensure a functional partnership as one of the key preconditions for efficient use of the EU Structural Funds and the Cohesion Fund.
For SMEs are included these programs which also impeach the SRI. There exist 26 Operational programmes and according to area of concern the SMEs have to choose the right one which is available for SRI approach. As an example we will be concentrate on programmes of guarantees for SMEs GUARANTEE, Programmes of support START, PROGRESS, DEVELOPMENT, ICT IN ENTERPRISES, ECO-ENERGY, INNOVATION, INNOVATION – Patent, POTENTIAL, COOPERATION - Technological platforms, PROSPERITY.[30]
Graph 4: Structure of the financial sources supporting SMEs for Czech Republic in 2008
illustration not visible in this excerpt
Source: Own research from Czech Statistical Office
We can see the structure of the financial support of SMEs which the basic role plays the combination of the public sources from EU and CR financial instruments.
2.5 Conclusion
The direct financial supports of SMEs are not one of the effectual tools for the entrepreneurship support. The business development is immediately influenced by the business environment´s quality. The SRI investment strategy that meets both financial and values-driven needs for the future prosperity and entrepreneurship development. The few sources in Europe detailing the sustainable and responsible investment (SRI) market, both in terms of the amount of capital invested in SRI as well as highlighting European and National trends. There continues to be a strong demand for information about the size of the SRI market across Europe, and therefore this research is important for all participants in European SRI trends.
European SRI continues to be an area of diversity with, for instance, the emergence in the last two years of SRI thematic funds and new asset classes. All this growth is driven by an increasing demand from institutional investors, a further mainstreaming of SRI into traditional financial services, and also a growing interest from individuals. In today’s time is the line between SRI and non-SRI becomes more difficult and another challenge is the inherent complexity of the European market. For example, national differences in legislation can significantly impact a domestic market.
For the long term perspective probably will be still continued the process of raising the importance of the SRI driven by the financial opportunities and supported by the demographic change of significant wealth being transferred to or earned by a more concerned generation. There is the evidence that mass market green and ethical investment will continue to grow strongly, supported by the demands of participants.
A key challenge for sustainable and responsible investors is in investing for the long-term while facing short-term pressures. There is no simple answer for combination money-making with ‘sustainability’ criteria. For example, in evaluating a company’s ESG issues, some investors will find the environmental policies to be the key input while others will point to the company’s human rights practices as the critical issue.
List of References
[1] BLOWFIELD M., MURRAY A. Corporate Responsibility a critical introduction. Oxford University Press, 2008. First published. ISBN-13: 978-0- 19-920909-5.
[2] European Commision. 2009: European Business – Facts and figures. Eurostat. I SSN 1830-8147.
[3] European Commision. 2008: Malé a střední podniky na prvním místě. ISBN 978-92-79-11072-6.
[4] Eurosif. 2008: European SRI Study.
[5] Eurosif. 2008: PRIME Toolkit.
[6] Eurosif. 2007: Venture Capital for Sustainability.
[7] Kyla Malcolm, Mark Tilden, Tim Wilsdon, Jessica Resch and Charles Xie. 2008: CRA Charles River Associates. Project No. D14806.
[8] UNEP Finance Initiative. Responsible Investmeent in Private Equity – Case studies, avaliable from www.unprig.org
[9] United Nations Industrial Development Organization. 2002: CSR – Implication for SMEs in developing countries.
[10] URL: <http://ec.europa.eu/enterprise/sme/funding_cs.htm>. <http://ec.europa.eu/enterprise/entrepreneurship/financing/index_en.htm>.
<http://ec.europa.eu/enterprise/entrepreneurship/financing/enterprise_finance_n dex/introduction.htm>.
<http://ec.europa.eu/regional_policy/atlas2007/fiche_index_cs.htm>.
<http://www.eif.org>.
<http://www.eif.org/jeremie/>.
<http://www.mpo.cz>.
<http://www.businessinfo.cz>.
<http://www.czso.cz>.
<http://www.strukturalni-fondy.cz>.
3. The Impact of the Payment Services Directive on SMEs in the Czech Republic
Ing. Rostislav Šárek / Karvina, Czech Republic
From 1st November 2009 a new System of Payment Act No. 284/2009 came into a force in the Czech Republic. It is one of the harmonization process results, which aims for the gradual harmonization of important laws European Union member states.
By adopting this law took place a new comprehensive modification of payment system in the Czech Republic, as well as in other European Union countries. Harmonization in this area has been set up so that on 1st of November 2009 all Member States were users of the Payment Services Directive established rules.
The foundation of the new Payment System Act in the Czech Republic became 3 transpositions of European Directives. It was the Payment Services Directive (2007/64/EC, also called PSD in the text), the Electronic Money Directive (2000/46/EC) and Directive 98/26/EC on Settlement Finality in Payment and Securities Settlement Systems. In this article the most watched Directive of the European Parliament and of the Council – Directive on Payment Services in the internal market - repeals the earlier directive about cross-border transfers (1997/5/EC).
First of all I would like to mention that PSD is the directive under full harmonization. This means that its transposition into domestic rule of law can not divert from the rules that are contained in it. The only exception is the so-called national discretion, the Directive expressly provides as an option for a national creative difference. These offer significant scope for the making of whole, which respects the needs and realities of national, namely the Czech, market.
The explanatory memorandum to the System of Payment Bill[31] provides that in order to reflect changes in the clear and understandable way and in regard to the scope of existing regulation adjustment problems, it was not possible to carry out simple amendment of the former act, but to create a new legislative act. This suggests that the system of payments statutory area in the Czech Republic worked before the new act on a different basis and new law provides a number of changes.
As regards the impact of the approved law on financial market subjects, then it is particularly important to mention that the part of Act that deals with private rules came into effect immediately after the beginning. Any interim provisions were applied. This imposed substantial demands on all stakeholders information, particularly because of the short time period from the completion of the legislative process to the effective date.
Interestingly, the whole legislative process became reality at high speed, regardless the significant impact on the general public and SMEs too. To the final version led the way of expertise made by the Ministry of Finance and the Czech National Bank. The main aim of this consultation was to engage the general public and professional in the process of transposition, to gain important comments, ideas, suggestion and proposals for the possible settings of regulatory requirements. There was an assumption that both services providers and clients as well as professional public should be involved in the discussion.
Payment Services Directive was published in the Official Journal of the EU on 5th December 2007 and came into force on the twentieth day following its publication in the Journal. The deadline for obtaining the public opinions has been set on 31st December 2007. Final bill was then approved by the Government of the Czech Republic on 25th of June 2009. The final version of the Act No. 284/2009 together with the law that amends certain laws in connection with the adoption of the Act were published in the Collection of Laws on 4th September 2009. Finally, an uniformed PSD transposition deadline for all Member States was fixed on 1st November 2009, which is also the date of coming into force in the Czech Republic.
During the legislative process in twenty-seven European countries, several Members indicated problems with the timely completion of the Directive transposition into national legislation. Such situation did happen and not all EU states transposed the Directive into their legal systems.
What the consequences would bring late involvement by one or more countries in harmonized system of payments so we can only speculate. Estimates and quantification of losses from huge untapped resources which were invested by financial market players to the project or the impact on the operation of that system in parallel circumstances remain a possible issue for consideration and are not part of the text.
The legal conscience of the new (and former too) laws to the general public is not, in my view, at a good level and even force of this legislation was no exception. I am sure that the sheer number and complexity of the text for ordinary people contributes to it. The former System of Payment Act, which was in force before 1st of November 2009 in The Czech Republic, had 36 sections, but the new Act comprises 147 sections.
It is certainly clear that within the limited time fund of small and medium-sized enterprises for this activity, the ability to monitor or even actively contribute to similar legislative consultations is eliminated. Consultations on the transposition of directives thus become the sole field to subjects which have financial and personnel opportunities to help or create a legal environment in accord with their needs.
From this perspective it is significant that PSD and the new System of Payment Act too are taking into account the lack of information and other constraints of small subjects in the market. Primarily, these subjects are small and medium sized enterprises and consumers.
Directive refers to the interesting fact that entrepreneurs have not the equal status as consumers. Consumers usually do not negotiate on the conditions of their contracts with service providers (e.g. banks), but they only accept the conditions which were specified in the contract. However, entrepreneurs are able to negociate and to arrange individual terms. They are able to protect their rights more stronger. Moreover, there is the fact that entrepreneurs are generally more prepared to take higher risks associated with less protection and are better prepared to work with risk and to decide it. It comes from the essence of their common work. On the basis of negotiation (and by the combination of these attributes) on the market, the results should be less protection of entrepreneurs, thus a higher risk, but on the other hand, the lower costs on payment services with greater flexibility of used product. Also the Czech Act tries to respect this view and it allows to achieve differences in information obligations between service providers and entrepreneurs.
On the contrary the text also speaks about the fact that in the case of small businesses (microenterprise)[32] and consumers, the ability to negotiate terms and conditions is very difficult. The case should be always assessed in terms of conditions and traditions of the coutry and therefore was left the national discretion to apply. The Czech Republic has adopted this option and stated by the law that for small businesses will be given the same degree of protection as for consumers. In actual practice this means that in exhaustively enumerated provisions (particularly regarding to the rights and obligations in the provision of payment services) can be the agreement between provider and the user, which is not a consumer or small enterprise, different from the statutory requirements.
The material to the consultation with the public has already indicated that the automatic merging of small enterprises and consumers group may not always be beneficial. Therefore the Czech legislation has such a result in the final stage that if a user does not communicate or demonstrate in reasonable time a fact that is a small enterprise, then is not considered as small enterprise.
This gives some scope for small enterprises which are able to fight for better conditions in the contract terms. Perhaps longer operation of this Act in the practice will show if small enterprises demand for the consumers´ level of protection. Former legislation provided the same level of protection for both, enterprises and consumers.
In the following part of the text I will discuss the specific impacts of the new Act on two groups of financial market operators. The first important group forms users of payment institution services. The second group is presented by the payment institutions itself – services providers. From this wide range I will concentrate on non-bank foreign exchange services. The effort is to create a simple ranking of specific effects and its impact (by significance) on two mentioned groups.
Among the major users of payment services belong the general public (individual consumers) and small and medium-sized enterprises. I would say that the most important novelty for these subjects, compared to former law, is the period of inter-bank transfers shortening from three to two days. Client’s money shall be credited on client’s account at the same day when the institution receives it. Client must have money really available. Shorter periods are applied to the domestic transactions in Czech crowns and euros too.
Another rule in this area has become a statutory duty to settle the payment transaction on the same day if it is the transaction within one provider in the Czech Republic and in the Czech currency.
Of course, there are various exceptions in this area and the above-mentioned settlement period (D+1) should not be met. This includes for example the case where payer makes payment order in the paper form. There is a possibility to agree with the client on extension of deadline one more day. On the contrary, agreeing on shorter period is also possible. Similarly, in the case the payment transaction involves an exchange of currencies (but other then the euro currency and the Czech currency).
Critics might argue that some financial institutions respected these deadlines before the effective day of the new Act. But it should be noted that this was not the rule. From the perspective of small and medium-sized enterprises, this is the obligation with significant impact on their daily activities. In the Czech Republic have been heard the voices that certain financial institutions were unnecessarily and unjustifiably holding client’s money that are exploited for their own enrichment. This all in the time of modern IT technology, when the procurement operations speed is so high. The acceleration of payments between companies is a certain positive contribution to the daily operation of the business units. It is also connected with the possibility to hold money longer time in accounts from which arise small, but positive returns. Employees also benefit from this because of shorter time to receipt wages from their employers.
The general principle is that payment transactions have to be carried out within the time limits which were agreed between providers and users, in the case time limits were agreed in accordance with the provisions of the Act. If there are special circumstances, the time limits should be extended due to provisions of other legislation. Such a case could be a situation when it would be necessary to delay the payment with respect to the application of the law against money laundering. The practice itself will determine whether certain provision does not go against the spirit of aforementioned law. In order to speedy settlement of payment transactions may be neglected the fight against the possibility of money laundering.
There is another important novelty, which the new law brings into the practice in the Czech Republic. It is a change in responsibilities of the authorized payment transactions, when the holder of payment instrument takes the responsibility up to 150 euros. It is a situation when the cardholder loses his card or it is stolen and he does not make the jam fast enough. Card without the chip can be misused very easily. According to the law, the provider of this service (in most cases bank) will be responsible for financial losses not only after reporting the loss or steal of the card, but also before that act. If the client suffers losses till the reporting that case, he bears 150 euros, but for each abuse. In the case of multiple card using is the participation multiplied by the number of abuses.
The ambiguous legal interpretation of this provision resulted in the Czech Republic into the significant discussion. The fact about the amount of 150 euros seemed to be problematic and was not clear if this amount should be considered as the total excess for all potential misuses of a mean of payment. However, in the Czech Republic some institutions came with the market way solution of this conflict. Because of high competition for clients they declare the excess of 150 euros as the maximum amount for any possible misuse of means of payment.
The minimum amount of participation (in any aggregate level) can be seen as a motivating factor for the earliest possible reporting of lost or stolen credit/debit cards. The law also supports this action by introduction new obligation for providers. The payment institution has to make a card block for free.
Before that, the relations could be completely based on the individual contracts between clients and banks and could create the way of responsibility for the financial losses. In practice, there also were those situations, that the client had 100 % responsibility for the losses for 24 hours after reporting the loss or theft of the credit/debit card. Liability insurance product became a common solution, which allows to correct these conditions. Moreover, the charge for credit/debit card blocking was from 200 to 2.000 Czech crowns (from 7 to 70 euros).
The third important novelty, which may have an important impact on clients, is the obligation to make accessible information about all transactions in the current account, at least once a month and for free. In this context is important to mention the Czech interpretation of law, which uses in the text two words – to make accessible and to provide. The second one means the active communication to the client. On the other hand, the first one is associated with the making certain activities on the client side, but the way to find the information may not have unduly burden for users.
By functioning of regulation in the practice can be expected that service providers will more use particular elements of electronic communications. All banks operating on the Czech market changed the charges on the date of the Act effective day. One fee analysis showed that the reaction of some banks represented on the Czech market was opposite than expected. However, the Act established in a few articles the obligation to provide some services free of charge, the total fee burden by some providers increased.
At the conclusion of this section have to be noted once again that the important benefit for virtually entire group of users is the fact, that there is a certain increase in the protection of each client.
As previously mentioned in the text, the second group that I will concentrate on is formed by payment institutions themselves. It is one of the groups, which is also authorized to provide payment services. The others are banks, foreign banks, credit unions, institutions of electronic money and several other entities.
It is always a legal entity authorized to provide payment services on the basis of its authorization as the payment institution, which was given by the Czech National Bank. In the permission must be clearly stated which payment services can be provided by the payment institution.
According to the former Act, certain payment services were provided in accordance with the bank license, for other was required to have foreign exchange license and further services were provided on the sole trader Act basis. The third group was also without a strong regulatory and supervisory framework. Therefore the fundamental difference is that the new Act implemented the term of payment institution which is completely subordinate to certain regulatory and supervisory regime.
We can say that it is a kind of residual category which will exist alongside the still regulated categories of payment service providers. The payment services on the Czech market will be able to provide either by one of the existing service providers whose work has previously been regulated, or by a subject which will obtain the permission to organize the payment institution. The basic difference from banks and credit and savings unions is that the payment institutions are not authorized to receive deposits from the public. They can do this only in order to carry out the payment transactions.
In harmonization process regard of the European Union is an interesting fact, that the authorization for payment activities in one Member State is recognized as valid in the other Member States. Directive on Payment Services introduced the term of the single passport. For provision of payment services in another State is necessary to notify the competent authority of home Member State.
Essential idea in the next section of the text is that due to possibility of national discretion in this area, services can be provided by subject, which will act as the payment institution of a short range. The Czech Republic took the possibility of this national discretion for the lenient regulatory and supervisory framework for subjects who provide payment services in reduced extension. In practice this means that such subjects should not meet the requirements, which are obligatory for payment institutions. On the other hand, these institutions can not benefit from a simgle passport advantage so they are refused to provide cross-border services on basis of a single license. But they also can apply for the permition in other Member States which adopted the similar national discretion.
[...]
[1] BIKKER, HAAF, (2000), p. 5.
[2] CHAN, SCHUMACHER, TRIPE (2007), p. 6.
[3] http://www.cnb.cz/m2export/sites/www.cnb.cz/cs/verejnost/pro_media/tiskove_zpravy_cnb/2005/ download/Stanovisko_CNB_mat_MF_14062005.pdf.
[4] http://www.cnb.cz/m2export/sites/www.cnb.cz/en/financial_market_supervision/ banking_supervision/banking_sector/analytical_publ/download/eng_bd_2001.pdf, p. 24.
[5] http://www.cnb.cz/m2export/sites/www.cnb.cz/en/financial_stability/fs_reports/FSR_2004.pdf, p. 19.
[6] Liquidity restrictions can be associated with the existence of information asymmetry and the related problem of adverse selection. A bank does not know a borrower's real financial situation hen providing a loan, unlike the borrower itself. Setting stricter lending criteria leads to higher risk borrowers participating. Liquidity restrictions can also be associated with moral hazard, i.e. a situation where a bank cannot prevent the borrower from behaving in a way leading to a rise in credit risk after the loan has been granted.
[7] http://www.cnb.cz/m2export/sites/www.cnb.cz/en/financial_stability/fs_reports/FSR_2005.pdf, p. 28 – 29.
[8] http://www.cnb.cz/m2export/sites/www.cnb.cz/cs/financni_stabilita/zpravy_fs/fs_2006/FS_2006_realna ekonomika.pdf, p. 19 – 20.
[9] http://www.cnb.cz/m2export/sites/www.cnb.cz/en/financial_stability/fs_reports/fsr_2007/FSR_2007_2_ real_economy.pdf, s23.
[10] http://www.cnb.cz/m2export/sites/www.cnb.cz/en/financial_stability/fs_reports/fsr_2007/FSR_2007_2_ real_economy.pdf, p. 23.
[11] The emergence of sustainable investing” - Nick Robins, 2008. Eurosif “HNWI & Sustainable Investment”, 2008.
[12] http://www.eurosif.org/publications/hnwi_sustainable_investment
[13] European Social Investment Forum
[14] http://www.sri.fortis.com/sri_home.asp
[15] http://www.eurosif.org
[16] http://www.eib.europa.eu/about/news/eib-statement-of-environmental-and-social-principles-and- standards.htm
[17] European Investment Bank
[18] http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=4619&userservice_i
d=1&request.id=0
[19] Facts and figures – SMEs in Europe, see http://ec.europa.eu/enterprise/entrepreneurship/facts_figures.htm.
[20] European Central Bank Working Paper Series No 1078, On the Real Effects of Private Equity Investment.
[21] see European Central Bank Working Paper Series No 1078, On the Real Effects of Private Equity Investment. Also see the Impact Assessment, page 53
[22] Alternative Investment Fund Managers
[23] Provided to CRA by EVCA
[24] The final report is avaliable from: http://www.eib.org/about/publications/eib-2008-corporate- responsibility- developments.htm
[25] The bond offered a unique combination of environmental characteristics. The proceeds, which have meanwhile been disbursed, were earmarked for the Bank's future projects supporting climate protection, in the fields of renewable energy and energy efficiency. It incorporated an option to purchase and cancel CO2 allowances (European Carbon Allowances or "EUAs") via the European Union's Emission Trading Scheme.
[26] http://ec.europa.eu/environment/eia/full-legal-text/85337.htm
[27] For more information see http://www.cmzrb.cz/index.php?lchan=1&lred=1
[28] http://www.strukturalni-fondy.cz/CMSPages/GetFile.aspx?guid=2ddd8ee6-bdf9-419c-9993- 7a2e9f58292f
[29] http://www.strukturalni-fondy.cz/Informace-o-fondech-EU/Regionalni-politika- EU/Dokumenty/Strategicke-dokumenty/Narodni-rozvojovy-plan-Ceske-republiky-2007-2013
[30] Avaliable from: http://www.mpo.cz/en/business-support/opei/default.html
[31] Explanatory memorandum to the System of Payment Bill, on-line available on: http://www.mfcr.cz/cps/rde/xchg/mfcr/xsl/bank_sektor_cr_46316.html?year=2009, download: 20. 10. 2009
[32] A microenterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million. The significant number of enterprises meet this conditions in the Czech Republic.
- Arbeit zitieren
- Grabau-Stiftung (Hrsg.) (Autor:in), 2009, Finanzierung von KMU in Osteuropa - Konferenz der HTW Dresden am 20.und 21. November 2009 , München, GRIN Verlag, https://www.grin.com/document/141632
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