WHAT DRIVES HIGH COST OF FINANCE IN MOLDOVA?

Why there are high costs to finance in Republic of Moldova? Is it a problem for business environment? These are the questions discussed in this paper. Following the well know Growth Diagnostics approach by Hausmann, Rodrik and Velasco, authors assess the barriers and impediments to access to finance in Republic of Moldova. Guided by international and national statistics we found evidence of poor intermediation, poor institutions, high level of inflation, and high collateral as major causes of high cost of financial resources in Republic of Moldova. At the end of the study authors give policy recommendations identifying other related fields to be addressed.