Financial market experts suggest to cultivate Lithuanian investment habits | Business

Government representatives assure that the state is trying to offer alternative investments to the public.

Vice Minister of Finance Vaida Markevičienė says that in Lithuania only 2.3 percent of people had invested in securities last year, at that time this indicator reached 17% in the European Union and 43% in the USA.

“We are light years away from the US, but we are also far from the European Union average. This means that there is definitely potential and as a state we are taking actions so that people take those first steps of investing”, said V. Markevičienė at the press conference on Thursday.

“Together with the state institutions, we have a common goal that the capital markets in Lithuania develop, and the common goal in Europe is for the capital markets to be the same as in America,” Eivilė Čipkutė, president of the Lithuanian Banks Association (LBA), said there.

According to E. Čipkutė, when companies borrow money only from banks, they lose flexibility.

“Indeed, business, people are currently very dependent on bank financing with us. In Europe, that figure for bank financing is 80 percent. Meanwhile, in America – only about 50-60 percent, this is a significant number. (…) When you only have one source, the interest rates change and everything else, so you become less flexible,” said the head of LBA.

“That shortcoming exists and we are here together trying to change it in Lithuania,” emphasized E. Čipkutė.

Simonas Krėpšta, a member of the board of the Bank of Lithuania (LB), added that the maturity of the capital market would also promote economic growth.

“In general, the development of capital markets is closely related to economic growth and not only growth, but also the level of technological development,” S. Krėpšta said at the press conference.

“In Europe, capital markets, financing of companies in non-bank forms, but in other forms, such as securities, are several times smaller than in the United States, and this is one of the reasons, among others, why the European economy grows more slowly and is significantly less innovative,” – explained a member of the LB board.

According to him, not a single high-value company has been established in Europe in the last 50 years.

“In the last 50 years, not a single company was founded in Europe with a value exceeding 100 billion. euros, we have seven companies in America worth more than a trillion and they were all created in the last 20-30 years,” he said.

According to S. Krėpšta, the solution to the problem is complex.

“There are four ingredients here. First of all, it is regulation – (…) is a segment of companies, because they need to know that they can borrow not only from banks, but also from the capital markets. We see that there is not much awareness and awareness of this in Lithuania. (…) The third component is investors, we need people who want to invest. (…) Then the banks, which bring together those who want to invest and those who are waiting for investments”, said a member of the LB board.

V. Markevičienė said that the state is trying to offer alternative investments to the public and emphasized its lack of financial literacy. The Vice Minister of Finance hopes that after people try to invest in, for example, state savings bonds, they will become familiar with the capital market and become interested in it.

“(We offer – BNS) investment products, last year it was state savings bonds, and defense bonds have just started, which people will be able to purchase from October 10,” she said.

“Financial literacy is also important. For a very long time we have been talking about how inactive Lithuanian people are in the capital markets. Sometimes, even our companies often lack knowledge about financing options not only through traditional means, about the possibilities of capital markets”, said V. Markevičienė.