Banks' Activities in the Field of Mezzanine Financing
Journal Title: Проблеми економіки - Year 2014, Vol 2014, Issue 2
Abstract
Reduction of the financial stability of enterprises has led to narrowing of opportunities for the "classic" financing, which reduced the number of suitable sites for giving loans and investment by banking institutions. The article explains the need to diversify the product line of banks by establishing mezzanine financing, which will allow banks to use additional tools for credit risk management and companies to obtain the necessary resources for the implementation of innovation and investment projects. The purpose of the article is to determine the advantages and disadvantages of mezzanine financing, to analyze the current state of development of this type of financing in international practice and to develop proposals for its implementation at the national capital market. As a result of the analysis of international experience in mezzanine financing development, the author suggests the banks in Ukraine to create a national mezzanine segment of the financial market as a basis for the development of mezzanine loan products (subordinated loans with the right to participate in the profits of the company recipient), the active cooperation with the real economy on the construction of a mezzanine using securities (convertible bonds or debt securities with warrants), investments in these financial instruments and also on the basis of establishing qualified loan funds subsidiaries in mezzanine financing. To ensure the development of mezzanine financing in Ukraine the government support is grounded in the legal aspect of creating the conditions for the implementation of mezzanine instruments and towards the use of state-owned banks or resources to develop a program mezzanine financing to small and medium-sized businesses with the participation of international financial and credit institutions through State Innovation Finance Institution.
Authors and Affiliations
Igor Kravchuk
Keywords
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