Rules, Regulations and Transaction Costs in Transition Bulgaria

Subsidies from State
funds
0 0 0 0 0 0 0
Grants from Stateowned
enterprises
0 0 0 0 0 0 0
Grants from private
individuals
50.0 50.0 50.0 0 0 0 50.0
Grants from private
foundations
0 0 0 0 0 0 0
Debt-equity swap 0 0 0 0 0 0 0
Securities issue 0 0 0 0 0 0 0
Other 50.0 50.0 50.0 0 0 0 50.0
In contrast to the poll carried out in 1996, when 4.5% of the interviewees faced supplementary conditions - in
addition to the interest - when obtaining direct or indirect funding, none of the entrepreneurs participating in this
poll faced such additional conditions.
In conclusion, the access to direct and indirect funding does not give rise to high transaction costs for the firms.
However, this access is too restricted due to the low supply of loans and the underdeveloped capital market in
the country. The unstable business environment increases the risk for banks, on the one hand, and makes the
entrepreneurs reluctant to resort to loans, on the other hand.
III.B.3 Costs of searching for and finding the needed raw materials, goods and services
42 out of 120 firms interviewed manufacture goods. 83.3% of them are able to find the necessary raw materials
on the official market, 4.2% find these materials on the unofficial market, while 5.8% buy materials on both
markets. This proportion is more or less the same as in 1996. The largest portion of raw materials obtained on
the unofficial market is in the production sector - 12.5% . This is due to the largest price differentials between the
two markets there.
To the question "Are there any differences between the prices of raw materials, goods and services on the
official and unofficial market?" the following answers were received: 36.7% respond that the difference
amounted to nearly 50%, and 1.7% claim that the difference exceeds 100%. The data shows that the largest
differences in the prices on the two markets exist in Sofia, on the one hand, and in the sector of production, on
the other hand.
50% of the 42 firms interviewed find the necessary raw materials and obtain them straight from the manufacturer,
30% use intermediaries, only 2.5% use services on the Internet, while 10.8% combine the first three options.
It takes 2 days on average for firms to get information on where to find raw materials, goods and services. The
maximum period indicated was 120 days. Average periods do not differ by sector or by town.
Finding the relevant information costs firms 45 Levs on average, with substantial differences existing by town and
by sector. (See Table 20).
Table 20: Responses to the question “How much money do you spend to find raw materials /
supplies?”
32