Financial Innovation in Medium-Sized Enterprises Optimizes Their Gravitation Towards Capital Markets: Financial Future in Perspective

Abstract

A major problem for medium enterprises is ensuring that their financial management exercises prudence in the attraction of alternative sources of financing in transition into middle tier, larger enterprise status and towards stock exchange. Difficulties in attracting capital, the high cost of bank credit, absence of robust financial and business information reporting capacities may represent obstacles. One partial solution is capacity development for access to stock exchanges and having these institutions with a strong allocation capacity to efficiently finance these businesses. Though underdeveloped in transition economies, they are potentially important institutions in successful financial performance of businesses. In a review of conditions for handling risk and uncertainty, developing capacity for access to stock exchanges through working capital combinations, this treatise demonstrates that medium enterprises could benefit from this approach. Regulatory reforms to facilitate the use of stock exchange financing and well-designed financial management models are recommended.