Private equity industry in the Central and Eastern Europe: Implications for real economy growth and financial markets development


LEMESHKO Oleksandra

Year of publication 2014
Type Article in Proceedings
Conference The Role of Financial Sector in Supporting the Economic Recovery of CEE Countries: Proceedings of the 8th International Conference on Currency, Banking and International Finance
MU Faculty or unit

Faculty of Economics and Administration

Field Management and administrative
Keywords private equity; economic growth; financial markets development
Description Devastating recent financial crisis followed-up by sever global economic recession spur world academic, business and government community into search for new ways how to preserve and appraise wealth of nations. One possible solution lies in a heart of instrument equally contributing to real economy’s growth and financial markets development – private equity asset management. Being a direct cross-border investment vehicle and innovative financial intermediary, for already half a century private equity funds provide a via media between investments into real and financial assets. This study aims to examine the impact of PE fund inflows on economic growth and financial markets development using cross-section data on 11 high- and middle-income economies from the Central and Easter Europe for the time span from 2000 to 2013. For more comprehensive picture the corresponding examination will be conducted for FDI inflows and equity mutual fund inflows with further comparison of the obtained results with the ones for private equity. This study departs from previous ones by using a new database of more than 5000 private equity and open-end mutual funds operating in CEE during the last 14 years. Although chosen sample does not cover as large number of countries as previous studies, it provides a useful insight into CEE economies’ growth and financial markets’ development, documenting important country and regional characteristics. Following established practice, the CEE economies’ growth and financial markets’ development is regressed by means of cross-section OLS over a number of independent variables corresponding to particular attributes of private equity and mutual fund flows as well as foreign direct investments, raw data on which is collected from Bloomberg and datasets of World Development Indicators and International Financial Statistics.
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