Challenges to Scaling Sustainable Private Equity Markets in Emerging Europe

Mihai Precup

doi:10.3390/su11154080

Abstract

The objective of this paper is to identify the main barriers to sustainable private equity market development in emerging European countries. The cross-country panel data analysis that was used in this paper will focus on the main determinants of the private equity investments over the period 2000–2013. We followed the methodology developed by Gompers and Lerner in order to estimate a panel data model with fixed and random effects. Starting from the existing literature, we analyzed variables that were confirmed by the previous studies and we also introduce new variables, such as the corruption index, uncertainty index, and regulation. The results of our study confirmed the existing hypothesis regarding the barriers to private equity development, such as the unemployment rate, the lack of exit mechanisms due to the low level of market capitalization, and the corruption.

Highlights

The private equity market in Eastern European countries accounted for only 3.4% of the totalTheinprivate equity in EasternEuropean accounted only of has the produced total investments this sector atmarket the European level in 2016.countries The Figure1 showsfor that the3.4%crisis investments in this sector at the European level in TheFigure shows that the crisis a sharp contraction in the growth of private equity in these countries, from 2.4 billion euros inhas2009 to produced a sharp contraction in the growth of private equity in these countries, from 2.4 billion1.3 billion euros in 2010.euros in 2009 to 1.3 billion euros in 2010
Our study shows that market capitalization is a determining factor for private equity in Eastern
We can conclude that the existence of an active and powerful capital market in Eastern Europe can lead to an increase in the volume of private equity

Summary

Introduction

The private equity market in Eastern European countries accounted for only 3.4% of the totalTheinprivate equity in EasternEuropean accounted only of has the produced total investments this sector atmarket the European level in 2016.countries The Figure1 showsfor that the3.4%crisis investments in this sector at the European level in TheFigure shows that the crisis a sharp contraction in the growth of private equity in these countries, from 2.4 billion euros inhas2009 to produced a sharp contraction in the growth of private equity in these countries, from 2.4 billion1.3 billion euros in 2010.euros in 2009 to 1.3 billion euros in 2010. The private equity market in Eastern European countries accounted for only 3.4% of the total. European accounted only of has the produced total investments this sector atmarket the European level in 2016.countries The Figure. Crisis investments in this sector at the European level in The. Figure shows that the crisis a sharp contraction in the growth of private equity in these countries, from 2.4 billion euros inhas. 2009 to produced a sharp contraction in the growth of private equity in these countries, from 2.4 billion. Euros in 2009 to 1.3 billion euros in 2010

Objectives

Methods

Results

Conclusion