The procedures, rules and laws for investing, raising money, borrowing and lending have become enshrined in the countries' commercial legal systems. An efficient regulatory system has been established which is overseen by supervisory agencies, and rules and laws are effectively enforced in the courts. In contrast, in the transition economies these rules, laws and procedures are often absent or still under-developed. Practices and procedures must be put in place and learnt very quickly. Although a significant process of convergence and harmonization has taken place, there are still important differences in the ways the financial systems in each market economy operate.
Some financial systems rely strongly on banks, while others depend on capital markets.
Nevertheless, many of the practices and procedures which private businessmen, bankers and investors adopt in their financial dealings are the same and provide useful models to their counterparts in the transition economies. The purpose of this Guide is to describe the methods and procedures for raising capital for private enterprises and trade in the transition economies. It describes the various sources and the procedures that private businessmen might use in seeking finance for their enterprises, as well as the tools and instruments which investors and bankers use in considering loan requests from private businesses. The Guide is divided into three chapters. Chapter 1 discusses the measures that governments can adopt to create an environment which facilitates financial transactions.