Small Businesses in Eastern Europe

The European Bank for Reconstruction and Development is working to develop new ways to help small businesses in emerging Europe. The efforts include direct lending, as the European Central Bank and the IMF express concern regarding minimal lending in the region.

According to EBRD president Suma Chakrabarti, the question is “How to do more in a way that maximizes job impact and growth. What’s the right balance…do we get through the banks more of do we do a more direct approach?”

The president of the European Investment Bank participated in the EBRD meeting and revealed the bank’s plans to increase lending to small businesses. However, most banks in the region are reluctant to lend as a result of the global crises, as well as additional regulations.

“Liquidity of the banking sector is in good shape in principle but the credit channels do not work in full capacity because of the lack of demand with good quality from credible borrowers,” explained Sergei Storchak, Russian deputy finance minister. “There is a huge structural problem.”

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