Eleventh Global Studies Conference

Abstract

We identify variables that explain the occurrence of financial disorders among Hungarian SMEs, hypothesizing that the ability for growth and competitiveness is one major cause. While there are several investigations to explore the contractual, taxational, and financial discipline of West European enterprises, there are no studies to uncover the financial troubles of Central and Eastern European small enterprises and their special causes. Our research is a pioneer in this regard. Our study is based on three surveys conducted in 2006, 2010, 2017 based on a random sample of SMSs in Hungary. We have found that negative impact of the crisis on SMEs was primarily manifested in paying for the contractors and paying the taxes. The models constructed to explain different types of financial troubles of SMEs have revealed that in the early phase of the crisis and the following period, chance of encountering financial problems was overrepresented among firms that are small in size, have no reserves or conscious financial plans and use their private funds to finance business.