Debt to equity swaps as alternative of financial restructuring in Serbian economy

Erić, Dejan and Stošić, Ivan (2015) Debt to equity swaps as alternative of financial restructuring in Serbian economy. In: New еconomic policy reforms. Belgrade Banking Academy, Belgrade, pp. 244-258. ISBN 978-86-7852-036-5

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Abstract

The goal of this paper is to analyze debt to equity swaps as potential alternative of financial restructuring in Serbian economy. We got motivation for making this paper on review of current situation of financial structure of large number of Serbian companies burdened with debts. High level of indebtedness and illiquidity limit business operations and decrease possibility for financing growth and development. Without intensification of investment activity of business entities there will be no dynamic economic growth and necessary structural changes. Traditional measures from the arsenal of restructuring of debts - postponement of repayment, extending dead-lines, write-off, changes in calculation of interest rate etc. can have but limited effect in existing conditions, when fast recuperation of many companies is required. For this reason, a massive application of debt to equity swaps, with increased role of the public and transparency in business operations and reaffirming the efficient and effective management, can pose a reasonable solution for faster alleviation from heavy indebtedness and increased illiquidity of Serbian companies.

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