Foreword

In the years before the COVID-19 pandemic, Romania enjoyed strong economic growth which reduced the gap in terms of income per capita with high-income European Union (EU) economies and resulted in a decline in unemployment. The pandemic-induced crisis halted this trend and sharp declines in revenues have caused financial challenges for many companies. The crisis has also revealed a number of long-term structural challenges in the Romanian corporate sector and capital markets. Notably, in contrast to many other economies, the Romanian corporate sector had limited access to long-term market-based financing in 2020. The recovery phase and the long-term strength of the Romanian corporate sector will depend on corporations getting access to a wider range of financing options, such as public equity and corporate bonds, and a more dynamic capital market. In particular, a better balance between traditional bank lending and corporate access to sources of market-based financing will help advance Romania’s integration into the European financial system.

Against this background, the Romanian Financial Supervisory Authority, in collaboration with the Ministry of Finance, requested support from the European Commission under the Structural Reform Support Programme to undertake a comprehensive review of capital markets in Romania and to develop a national capital market strategy. The OECD was designated as the implementing partner for the project.

This Review maps capital markets in Romania and assesses the main challenges before putting forward policy recommendations for improving Romanian companies’ use of market-based financing. The policy recommendations proposed are intended to provide guidance to policy makers and authorities in their efforts to introduce a Romanian capital market strategy for growth.

This Review is part of the OECD Capital Market Series, which informs policy discussions on how capital markets can serve their important role to channel financial resources from households to productive investments in the real economy.

To prepare this report, the OECD Secretariat conducted substantive research to understand the trends and the functioning of capital markets in Romania. The Secretariat greatly benefitted from consultations with representatives of relevant Romanian authorities, a large number of market participants and other experts. A detailed description of data sources and the methodology for data collection and analysis are provided in the Annex.

The Review was prepared by a team led by Serdar Çelik, Acting Head of the Corporate Governance and Corporate Finance Division within the OECD Directorate for Financial and Enterprise Affairs, composed of Thomas Dannequin, Adriana De La Cruz, Carl Magnus Magnusson, Alejandra Medina, Tugba Mulazimoglu and Yun Tang. The project was produced with the financial assistance of the European Union via the Structural Reform Support Programme.