The Main Changes in Financial Behaviour of Firms in Transition Economy: An Estonian Case

The main objective of this paper is to analyze main changes of financial behaviour of Estonian companies in the period of economic transition in Estonia from 1994 to 2002. Empirical results of Estonian firmsí interview study, undertaken annually during 1994-2003, are presented in the paper. Other sources used in preparation of this paper are derived from publicly disclosed statistics of financial institutions and different financial instruments. The analyze concentrates on informal borrowing and lending in comparison of average interest rate being applicable on official lending from Estonian commercial banks. There exists strong tendency of decrease of informal lending and borrowing. If the informal borrowing was mentioned as an important source of financing in the questionnaires of mid-1990, it has become insignificant in last questionnaires. The same can be seen in lending to own employees together with increase in availability of the loans to íordinaryî people the lending from employer has decreased.