Access to financial sources in Serbia: the use of mezzanine instruments

Access to sources of finance is one of the most important criteria used to determine the quality of the investment climate in some country. This matter is of paramount importance for both domestic and foreign investors. The paper underlines that besides traditional and pure forms of finance such as debt and equity, there are also hybrid forms that are widely used in developed countries. Such types of contracts are called mezzanine instruments and have the characteristics of both debt and equity. Their flexibility, lower issuance costs and lack of specific laws in this area, represent their competitive advantage over other forms of finance. The authors shall discuss whether mezzanine finance instruments could be used in Serbia and shall attempt to demonstrate that this form of finance is an adequate solution to be implemented in certain Serbian companies following the privatization process.