Anna Kornyliuk

Over the past three decades, the relative bank loan demand has changed due to the arising small and medium-sized enterprises (SMEs). Therefore, banks in their operations face the problem of processing an ever-increasing number of loan applications.
The aim of this paper is to develop an auxiliary approach to assessing the prior creditworthiness of long-term SME projects with nonstandard cash flows.
This study reveals how the principles of value-based management can be incorporated into the process of borrower’s creditworthiness assessment to improve the process of screening loan applications. For this, the internal rate of return was used as a criterion for loan granting decision at the initial stage of loan underwriting.
An algorithm for the preliminary evaluation of loan applications is proposed and is based on the principle of maximizing the shareholder value of banks. This algorithm helps to define the credit terms taking into consideration the distribution of positive cash flows throughout the project’s expected economic life, calculate the possible real effective interest rate concerning the borrower’s nonstandard cash flow schedule, make a rough analysis on the economic efficiency of lending and state the necessary criterion to initiate the procedure of loan underwriting for the projects with nonstandard cash flow schedules.
The proposed estimation algorithm stemming from the IRR-approach for the cash flow analysis can also be initially used by a borrower as a tool for credit solvency self-testing via screening of periods with corresponding cash flows that can be used for loan servicing.

SMEs are the main drivers of economic development. As the debt crisis and coronavirus crisis show, despite their importance, they are extremely sensitive to economic downturns. Therefore, SMEs need to be supported through various tools. The paper is aimed at evaluating the SMEs’ bank and governmental support in the northern and southern EU countries in two crisis periods and assessing the financial state of SMEs on the eve of coronacrisis using micro-level data.
It was proved that bank loans and credit lines remain the main sources of SMEs’ financing. After the debt crisis, banks are becoming more loyal to SMEs.
It was proved that SMEs from the northern EU countries suffered less from the previous crisis and therefore started their recovery earlier than the southern ones in terms of profitability, liquidity and debt burden. In addition, it was shown that both groups on the eve of the new turbulence period were in better financial state compared to the previous debt crisis.
The southern EU countries suffered more from both crises. At the same time, due to effective governmental support and bank loyalty, their SMEs entered the coronacrisis at the same level of financial stability as the northern ones. Since the new support measures are concentrated primarily in the banking sector through loan guarantee schemes and reduced interest rates, it is essential to provide debt financing to high-quality borrowers and avoid the debt crisis in southern counties.

Regional development is related to the effective management of disruptive industries on the local level. In the European Union, the innovation regional development policy is based on a smart specialization strategy, which neighboring countries try to apply as well. In their regional strategies, they notice the goals which are designed within the Joint Research Center methodology. It allows revealing the most efficient industries in the region, leading to a new level of regional competence on the global level. The study aims to identify smart specialization priorities based on JRC methodology in certain Ukrainian regions and assess its applicability in emerging markets (Ukrainian case) and develop the set of recommendations considering the specificity of the national economy.
The methodology is based on the static and dynamic analysis of economic (the indicators of the growth of average salaries and the number of employees indicators are calculated) and innovation (the indicators of productive, process, organizational, and marketing innovations are analyzed) potential of the region, which is examined in the article. It is revealed that the JRC methodology in identifying the smart specialization priorities has limited application in Ukraine. The restrictions related to the lack of data on innovations and other economic indicators. The analysis of certain regions shows what industries should be recommended as the priorities of smart specialization. However, discussions of the calculated results with the key stakeholders have differences which are not acceptable in the regional innovation policy development. As a result, the experts’ opinions are recommended to consider the priorities of different regions in Ukraine and other developing countries, which are on the path of smart specialization during stakeholders’ communication sessions.