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The paper asks why thousands of mid-sized Lebanese companies remain invisible to international credit analysts, regional lenders and trade platforms. Outside a small number of listed commercial banks, virtually no Lebanese company appears on international financial data platforms, while a European firm of comparable size is covered by years of audited statements and peer data. The paper argues that this opacity is not accidental but the product of a long-standing design: family governance resistant to outside equity, parallel sets of accounts for partners, tax authorities and banks, and a preference for costly short-term debt over dilution.
It then traces how the banking sector cultivated that opacity. High interest rates engineered to finance the sovereign and defend the fixed exchange rate made government paper more attractive than productive lending, kept small and medium-sized enterprises dependent on overdrafts and short-term credit, and starved the Beirut Stock Exchange of liquidity. The fiscal consequence is a regressive system: unable or unwilling to tax opaque firms and high earners, the state relies on VAT and fuel duties, shifting the burden onto low- and middle-income households.
For investors, lenders and policymakers, the paper contrasts Lebanon with European disclosure regimes, using Spain as the reference case, and sets out a corporate exit path built on transparency, equity and a functioning domestic market for small-company capital.
Key findings
- In 2019, of some $190 billion in bank deposits, about $130 billion was tied up in sovereign debt while private-sector loans stood at around $40 billion.
- Many family businesses kept three sets of financial statements: a true set for partners, a loss-making set for the tax authorities and an inflated set for banks.
- Spanish law requires every limited liability company, regardless of size, to file its annual accounts with the Commercial Registry, with registry closure and penalties for non-compliance.
- The paper calls for IFRS adoption, independent governance and a shift from debt-dependent models towards private equity partnerships and recapitalisation funds.
- It identifies the revival of the dormant Electronic Trading Platform, alongside cloud-based national scoring, as an urgent national priority for reopening access to international capital.
Summary of the paper; the full analysis is in the PDF.