Macroeconomic and institutional barriers of “normalization” of an enterprise’s financing models in Ukraine

Vladislav V. Zymovets, Nataliia M. Sheludko, Stanislav Ye. Shyshkov


The conditions for raising capital and the availability of capital to finance business are important for the economic development of the country. They are especially relevant for countries with low capital accumulation. The article considers how the institutional environment and macro financial imbalances affect the conditions and ways of attracting capital by business structures in Ukraine. To assess this impact, the ratio of the supply of current assets in the financial market (money supply M3) and the demand of the state for them (public debt), which during 2008-2019 decreased from 2.7 to 0.7. That is unprecedentedly low level and is the reason for the reduction of bank lending to businessses. To assess the level of depletion of the banking system, the BSER indicator (the share of bank assets that is immobilized to finance public debt) was calculated. The growth of the indicator from 5.6% in 2008 to 51.5% in 2020 indicates a progressive depletion of the banking system due to the reallocation of banks' assets to finance public debt. Analysis of the trend of fund raising by business in the stock market by placing shares showed that the number of issues and their volumes during 2015-2020 decreased significantly, and not less than 90% of the volume is carried out to recapitalize banks (including state) and state enterprises sector of the economy. The hypothesis that the identified unfavourable macro financial and institutional factors (crowding out effect, high currency risk, insecurity of property rights, raiding activity, length of court proceedings, etc.) led to the spread of non-transparent business financing practices in Ukraine and segmentation of Ukraine was confirmed. It is proved that the accumulation of a significant part of current assets in the shadow segment creates an artificial deficit of capital in the market and does not contribute to intersectoral mobility of capital, which inhibits the economic development of the country. To solve this problem, a strategy was proposed to restore the functional capacity of the country's financial system by gradually reducing the share of banking system resources invested in public debt to 10%. To deepen the analytical justification of the results obtained in further research, it is advisable to pay special attention to modelling and forecasting the impact of macro financial and institutional factors on the choice of instruments and channels of business financing.


financial sector, stock market, banking system, industrial enterprises, business financing models, financial system functionality

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