Financial market imbalance: reasons and peculiarities of occurrence in Ukraine

  • Received January 30, 2017;
    Accepted February 15, 2017;
    Published May 12, 2017
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  • Article Info
    Volume 14 2017, Issue #1 (cont.), pp. 227-235
  • Cited by
    11 articles

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Financial imbalance is the reason of a macroeconomic instability. This study aims at identifying the institutional causes of financial markets imbalance. The authors consider that financial intermediaries in Ukraine work in a speculative market segment carrying out high-risk transactions with the purpose of earning a huge profit. In fact, in Ukraine the role of these institutions in the investment process financing is insignificant. The authors show that soundness of banks along with the ease of access to loans and a low level of confidence in national banking system are the main reasons of instability in financial market in Ukraine. Due to scarcity of financial capacity and refusal to carry out transactions in a high-risk market segments, insurance companies are unable to entirely perform functions of risk redistribution. Competitiveness of Ukrainian financial market remains low with a limited financial services nomenclature and it may be considered to be attractive for potential foreign investors.

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    • Fig. 1. Distribution of financial assets by the main types of financial institutes in Ukraine
    • Fig. 2. LTD ratio in the banking system of Ukraine in 1997-2015
    • Fig. 3. Flow of state budget subventions from State budget of Ukraine to local budgets in order to overcome results of uninsured events over the period of 2001-2015
    • Fig. 4. The value added structure of financial institutions in Ukraine
    • Fig. 5. Comparing flow of an average salary in the financial sector
    • Table 1. Rating of indices of financial market development in Ukraine
    • Table 2. Pilot parameters of Correlation Regressive Analysis over the period 1997-2015
    • Table 3. Pilot parameters of Correlation Regressive Analysis over the period 2001-2015
    • Table 4. Pairwise Granger Causality tests