Classification Of Financial Instruments Research Articles

Classification and presentation of equity in IFRS financial statements

Subject. This article examines the methodological basis for the classification and presentation of an organization's equity in financial statements prepared in accordance with IFRS. Objectives. The article aims to substantiate the approach to the classification and presentation of information on the equity of an organization, ensuring its relevance and faithfulness. Methods. For the study, we used a logical analysis. Results. Based on the analysis, the article confirms the prospects for the combined use of the two features of the classification of capital items proposed in the Exposure Draft IASB/ED/2023/5 by the International Accounting Standards Board (IASB). Conclusions. As innovative financial instruments emerge, new problems will arise with the classification of financial instruments that have characteristics of both capital and liabilities. In this regard, it is necessary to continue research in the direction of the evolution of approaches to the classification of capital.

The Effects of Laws and Regulations and of the Shareholders' Discretion in the Classification of Financial Instruments – A Preliminary Analysis

The Effects of Laws and Regulations and of the Shareholders' Discretion in the Classification of Financial Instruments – A Preliminary Analysis

Forwards as one of the main investment instruments in the agricultural sector of Ukraine

The current transformation of the country’s economic system determines instability in the terms and mechanisms of the agricultural sector financing. The use of new financial instruments enhances the capacity of the agricultural sector of the national economy to generate investment resources. Financial instruments such as bank lending, leasing services and investment in agricultural projects are now widely known and used. Improving the investment attractiveness of the country’s agricultural sector and its development potential can be achieved through the introduction of modern financial instruments such as forward and futures contracts. The use of these financial instruments is a promising direction of formation of investment resources. Forwards will be especially useful for those agricultural producers who lost their crops last year and feel a working capital deficit.
 The article considers the essence and classification of financial instruments; special attention is paid to the derivative financial instruments. The international experience of their use, as well as their use in the agricultural sector of the economy of Ukraine, has been studied. The main problems faced by market participants of the financial instruments market were revealed. The use of modern market instruments for price risks hedging and trends of the derivatives’ development as hedging instruments on the case of the agro-industrial company is analysed. The main problems of market participants in the agricultural sector of Ukraine have been identified and recommendations on the conditions for the use of financial instruments have been given. Recommendations on the development of derivatives in the grain market of Ukraine and the necessary actions by the interested parties, in particular government agencies, grain market participants, agricultural producers, investors have been developed. The necessity of using modern financial instruments to form the investment resources in the agricultural sector of the economy by combining internal (agrarian receipts, leasing services, forwards, bank financing) and external (bonds, letters of credit, guarantees, factoring) financial instruments for the agricultural sector producers is demonstrated.

Presentation of Financial Assets in the Monetary Statistics

The purpose of the study. Currently, the issues of determining, presenting and analyzing indicators of economic assets, in particular, financial ones, are relevant, since financial assets, along with nonfinancial ones, constitute the most important characteristic of national wealth as a level of development of the country and are the basis for constructing national accounts, indicators of monetary statistics and other sections of macroeconomic statistics. In modern conditions, the role of these constructions in making effective management decisions at the macro level, individual sectors, economic entities, on the development of the national economy as a whole is increasing. The aim of the work is to systematize theoretical and practical developments on the definition and presentation of data on financial assets in modern monetary statistics of Russia, to identify areas for improving methods for assessing financial assets, a system of indicators characterizing their presence, structure and dynamics.Materials and methods. In the paper, the authors considered the essence, functions, classifications of financial assets and liabilities, applied structural and dynamic data analysis, as well as methods of theoretical research in the form of generalization, comparison and special analytical procedures based on official statistics from Rosstat, the Bank of Russia, the Ministry of Finance and international statistical organizations.Results. The work formulates the main directions of the study of financial assets, based on modern international statistical standards, taking into account domestic practice. Topical issues of the theory and practice of statistical collection and presentation of data on financial assets in monetary statistics, the application of definitions and classifications of international standards to Russian official statistics are considered. The features of the reflection of data on financial assets at the macro level, in the system of indicators of monetary statistics, have been formulated. The authors carried out a quantitative assessment of the structure and dynamics of indicators of monetary statistics in Russia, which characterize the state and movement of financial assets and liabilities.Conclusion. A statistical study of transactions with financial assets and in connection with the formation of monetary aggregates makes it possible to identify not only the main trends in the development of these processes, but also makes it possible to characterize the contribution of a particular subsector to the total value of financial intermediation, to analyze the relationship between the financial corporations’ sector and other sectors, and also a comprehensive change in the volume and composition of stocks and flows of financial assets as a result of exchanges between residents and non-residents.The authors comprehensively reviewed the methodological framework for constructing money aggregates and reviews of the financial corporations’ sector, incl. in the context of financial instruments. Statistical information on financial assets in monetary statistics is presented in terms of the formation of the money supply, other aggregates, the base, as well as the interaction between the institutional subsectors of the financial sector. A comprehensive description of the presence and movement of financial assets in the composition of monetary statistics can be obtained from the monetary surveys, containing data on the flows and stocks of financial assets and liabilities of financial corporations (residents) in relation to all other sectors (residents), as well as non-residents.All considered data are comparable [17,18] since basically, one classification of financial instruments is applied, a different degree of detail can be applied in practice for different constructions, but the base is the same. Questions of the theory and practice of presenting indicators of financial assets in the considered sections of macrostatistics and their analysis are a relevant and promising direction for improving national statistical accounting. Work in this direction continues, and the process of actively introducing international standards into domestic statistics has been going on for quite a long time. In addition, telecommuting, collecting information via the Internet, the emergence of a large number of new financial instruments and transactions, including modified ones, in the business turnover of institutional units complicate their identification and classification.The authors of the presented study have previously considered in their articles the problems of macroeconomic calculations, which allowed them in their work to consider in more detail the topical issues related to the processes of reflection of financial assets in monetary statistics.

Цільові облігації: ризики та доцільність застосування

The conditions for attracting and the availability of capital to finance construction are important for the economic development of Ukraine. The article considers how the institutional environment and variability of legislation, in particular, in the investment and fiscal spheres cause developers and participants in capital markets to constantly search for the most optimal in terms of taxation and least risky instruments for financing construction, one of which is corporate target bonds. To assess the risks of using target bonds in construction financing, the evolution of the legal form of issuance, circulation and redemption of target corporate bonds in Ukraine was considered, which was too late to avoid large-scale defaults and too fragmented to properly protect investors’ rights. The rudimentary nature of target real estate bonds in Ukraine, their inconsistency with the EU experience in terms of regulation and practice of capital and real estate markets. The functionality of the existing publicly available databases on the stock market of Ukraine for aggregation and analysis of information on different types of financial instruments, including target corporate bonds were confirmed. Investment and fiscal risks of using target corporate bonds for real estate financing are studied. It is proved that the scheme of financing construction through the issuance of target corporate bonds has significant risks for investors and developers. The contradictory nature of the implementation of EU legal norms on the classification of financial instruments and the lack of adequate mechanisms to protect investors in target corporate bonds are substantiated. To deepen the analytical justification of the results in further research, it is advisable to pay special attention to a comprehensive study of the advantages and disadvantages of existing and future models of construction financing in regularly updated legislation, in particular in the field of taxation and capital markets regulation.

The effect of loan-loss provision, non-performing loans and third-party fund on capital adequacy ratio

This research was conducted in connection with the effective enactment of International Financial Accounting Standard IFRS 2020 to improve the concept of hedging accounting as well as basic measurement and classification of financial instruments. IFRS carries the concept of Expected loss backup which begins to acknowledge losses if there is a potential failure to pay even though it has not really happened, allowing the bank to form a larger loan-loss provision. The loan-loss provision is formed based on the number of failed pays in credits indicated by the ratio of Non-Performing Loans (NPLs). Fund distribution can be regulated by the Third-party Fund (TPF). The increasing number of loan-loss provisions and NPLs are feared to affect capital conditions for the bank. Therefore, the study aims to determine the partial and simultaneous influence of the loan-loss provision, Non-Performing Loans (NPLs), and third-party Fund (TPF) against the bank's capital adequacy ratio (CAR). The samples in this study are central government-owned banks, namely Bank Mandiri, Bank Negara Indonesia, Bank Rakyat Indonesia, and Bank Tabungan Negara period from 2011 to 2018. Data taken is a data time series of the quarterly financial statements published by the respective online website of the bank. The analysis used is a multiple linear regression analysis using SPSS Tools version 21 and Microsoft Excel. The results showed that a partial loan-loss provision had no significant effect on the bank's capital adequacy ratio, while the Non-Performing Loans (NPLs) and the Third-party Fund (TPF) were partially influential of the bank's capital adequacy ratio. Simultaneously the three independent variables have a significant effect on the dependent variable capital adequacy ratio (CAR).

ПРАКТИКА ТА ПРОБЛЕМАТИКА ВИКОРИСТАННЯ В УКРАЇНІ РИЗИКОВИХ ТА БЕЗРИЗИКОВИХ ІНСТРУМЕНТІВ ЗАОЩАДЖЕНЬ ДОМОГОСПОДАРСТВ

The aim of the article is to classify and characterize financial instruments of household savings and analyse the practice of their use in Ukraine in 2010–2020, identify the advantages and disadvantages of using risky and risk-free financial instruments of household savings. The financial instruments of household savings are a bank deposit, securities (stocks, bonds), investment fund shares and trust management of personal funds. Financial instruments for making savings are classified into risky and non-risky. Under risky were considered instruments for which the yield is not determined in the future. The classification of financial instruments into risky and risk-free allows us to identify the advantages and disadvantages of each of them, to explore the practice and issues of their use in Ukraine. In writing the work used analysis and synthesis as methods of theoretical knowledge of phenomena and comparison as an empirical method for research. For conducting research and substantiation of relevant conclusions, the indicators of the average annual yield on deposits in banking institutions, the average annual yield on ordinary shares of Ukrainian enterprises, and the annual rate of change in prices for goods and services (inflation) for the period 2010–2020. The study was performed on the materials of the State Statistics Service of Ukraine, the National Bank of Ukraine, and the Ukrainian Stock Exchange. In particular, the practice of using a bank deposit as the most common risk-free financial instrument among households and ordinary shares as one of the most accessible risky financial instruments for households was studied. It was studied that risk-free assets (on the example of term bank deposits) are a more reliable financial instrument of household savings but less profitable than risky instruments (on the example of Ukrainian stocks). Quantitative measurement of the ratio of risky and risk-free financial instruments in the structure of the household budget will deepen existing approaches to understanding the process of personal income and expenditure management and opens prospects for further research in this area of financial science.

МЕТОДОЛОГІЧНІ ТА ОРГАНІЗАЦІЙНІ ЗАСАДИ ОЦІНКИ ФІНАНСОВИХ ІНСТРУМЕНТІВ СУБ’ЄКТА ГОСПОДАРЮВАННЯ

Peculiarities of accounting for transactions in derivative financial instruments are due to the risks inherent in such objects of accounting, in particular in terms of uncertainty about their fair value in the future. Improving the methods and forms of regulation of derivative financial instruments through the mechanisms of accounting methodology determine the need to find opportunities to improve the methodological and organizational principles of accounting in terms of valuation of derivatives, taking into account the practice of IFRS to achieve reliability of financial statements. Difficulties in reconciling UAS with IFRS on the valuation of derivative financial instruments (historical or fair value) are due to the application in regulations of different approaches to the formation of financial statements. It is proved that the use of the historical cost method for valuation of financial instruments is inappropriate, as their contractual nature is manifested in the ability to carry out indefinitely transactions that do not lead to cash settlements, but increase the financial risks of the enterprise. The application of the fair value method for the valuation of derivative financial instruments sets out special requirements for the organization of the valuation process of financial instruments in order to ensure the further choice of sources of financing and financial risk management. The list of elements of the accounting policy which should be provided in the administrative document on the accounting policy of the enterprise which cover methodical and organizational receptions of the account is defined. The classification of financial instruments is defined as the basis for the choice of accounting policy methods. The minimization of potential risks of losses due to the use of incorrect valuation of financial instruments should be facilitated by appropriate verification based on the comparison of valuation results based on independently obtained prices with the results provided as a result of valuation procedures. It is proved that the audit should cover liquid financial instruments, as well as those instruments that do not have market prices, which will facilitate further decisions on the adjustment of valuation models and methods.