The role of the banking system in supporting the financial equilibrium of the enterprises: the case of Ukraine

Svitlana Yehorycheva,Mykhailo Krupka,Tetiana Gudz,Nataliіa Tarasevych,Oleh Kolodiziev

doi:10.21511/bbs.14(2).2019.17

Abstract

The financial equilibrium (“financial health”) of the enterprises is a prerequisite for their sustainable development, which ensures macroeconomic stability of the economy and the welfare of the state. It should be supported by the banking system, which performs the function of the effective reallocation of capital. Recently, the Ukrainian banking system itself is in a challenging situation and is undergoing a period of transformation. The purpose of the study is to assess how sufficiently the banking system of Ukraine supports the financial equilibrium of enterprises and to find the possibilities to strengthen its role in the progress of the real sector of economy. The authors single out three stages of financial equilibrium growth; each of them can be supported by the relevant banking services. The empirical analysis proves that the Ukrainian banks successfully ensure only the first stage, namely, liquidity balancing. To quantitatively assess the role of the banking system in supporting the enterprises’ financial equilibrium, a multivariate regression applying mathematical gnostic analysis in the program shell R Console is used. The research makes it possible to find out that only the economy monetization, the share of time deposits of economic entities and growth rate of mortgage loans have a positive effect. The authors conclude that the problems of both enterprises and the banking system are in the sphere of development and implementation of government economic policy and are aggravated by the restrictive monetary policy.

Highlights

The Ukrainian economy faces many challenges of current and strategic development: overcoming the remote consequences of the deep 2014–2015 recession, ensuring acceleration of the GDP growth, creating environment for public debt reduction, deep restructuring and modernization of the innovative basis, etc
The results suggest that lines corporate finance, the types of financial equilibrium, of credit provide bank-managed flexibility for the the stages of its growth, and management methods. firms, which are able to obtain them
The financial equilibrium can be defined as bal- The financial equilibrium is a dynamic phenomeancing the processes of formation of the enter- non that undergoes certain stages from the lower, prise’s financial position depending on their in- basic forms, which are the basis of survival of the tensity, direction of change, the nature of internal enterprise, to the highest, which constitute couninteraction, and the sensitivity to the influence of tercyclical anti-bankruptcy buffer and financial external factors (Gudz, 2018)

Summary

Introduction

The Ukrainian economy faces many challenges of current and strategic development: overcoming the remote consequences of the deep 2014–2015 recession, ensuring acceleration of the GDP growth, creating environment for public debt reduction, deep restructuring and modernization of the innovative basis, etc. Financially strong and economically stable business entities in rather favorable external environment are able to realize these ambitious and at the same time, vital tasks to preserve an independent state. Along with the institutional factors that play an extremely important role in implementing economic reforms in emerging market countries, the banking system should have a serious positive impact on the real economy.

Objectives

Results

Conclusion