Financialization of the global economy: Macroeconomic implications and policy challenges for Ukraine
The acceleration of the global economy’s financialization with the spread of the COVID-19 pandemic highlights the risks of financial markets volatility, boom and bust cycles, violation of price stability, and debt sustainability. In such conditions, the high degree of Ukraine economy’s external open...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2021-02-01
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| Series: | Investment Management & Financial Innovations |
| Subjects: | |
| Online Access: | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/14667/IMFI_2021_01_Bogdan.pdf |
| _version_ | 1818401437734928384 |
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| author | Tetiana Bogdan Vitalii Lomakovych |
| author_facet | Tetiana Bogdan Vitalii Lomakovych |
| author_sort | Tetiana Bogdan |
| collection | DOAJ |
| description | The acceleration of the global economy’s financialization with the spread of the COVID-19 pandemic highlights the risks of financial markets volatility, boom and bust cycles, violation of price stability, and debt sustainability. In such conditions, the high degree of Ukraine economy’s external openness, significant amounts of external debt, and lack of domestic investment and credit resources raise the issue of external financial threats to the national economy. This study aims to identify the risks of financialization and debt accumulation across the globe, specify protective arrangements and vulnerabilities of Ukraine’s credit system to external shocks and develop a set of policy actions for global risks mitigation in Ukraine. To achieve this goal, available theoretical sources and policy studies were reviewed, and international databases of financial indicators have been analyzed. As a result, the underdevelopment of the financial system in Ukraine and insufficient use of the credit levers by the private sector are revealed, which impede economic growth but simultaneously mitigate the impact of external shocks in Ukraine’s economy. On the other hand, high external debt reliance is confirmed, which increases the risks of financialization and cross-border capital flows for Ukraine’s economy. A set of financial and organizational measures (targeted at eliminating credit and debt distortions in Ukraine and creating a financial basis for sustainable economic growth) are devised; they refer to development of the national capital market, fiscal policy adjustment, acceleration of the foreign direct investments inflows, shifts in the NBU’s monetary policy, and the management of foreign exchange reserves. |
| first_indexed | 2024-12-14T07:52:28Z |
| format | Article |
| id | doaj.art-d1aa4a55f5ee4120b479c5aa7ab2165f |
| institution | Directory Open Access Journal |
| issn | 1810-4967 1812-9358 |
| language | English |
| last_indexed | 2024-12-14T07:52:28Z |
| publishDate | 2021-02-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj.art-d1aa4a55f5ee4120b479c5aa7ab2165f2022-12-21T23:10:41ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582021-02-0118115116410.21511/imfi.18(1).2021.1314667Financialization of the global economy: Macroeconomic implications and policy challenges for UkraineTetiana Bogdan0https://orcid.org/0000-0002-6133-5336Vitalii Lomakovych1https://orcid.org/0000-0002-4945-1713Doctor of Economics, Scientific Director, NGO “Growford Institute”Chief of the Board, NGO “Growford Institute”The acceleration of the global economy’s financialization with the spread of the COVID-19 pandemic highlights the risks of financial markets volatility, boom and bust cycles, violation of price stability, and debt sustainability. In such conditions, the high degree of Ukraine economy’s external openness, significant amounts of external debt, and lack of domestic investment and credit resources raise the issue of external financial threats to the national economy. This study aims to identify the risks of financialization and debt accumulation across the globe, specify protective arrangements and vulnerabilities of Ukraine’s credit system to external shocks and develop a set of policy actions for global risks mitigation in Ukraine. To achieve this goal, available theoretical sources and policy studies were reviewed, and international databases of financial indicators have been analyzed. As a result, the underdevelopment of the financial system in Ukraine and insufficient use of the credit levers by the private sector are revealed, which impede economic growth but simultaneously mitigate the impact of external shocks in Ukraine’s economy. On the other hand, high external debt reliance is confirmed, which increases the risks of financialization and cross-border capital flows for Ukraine’s economy. A set of financial and organizational measures (targeted at eliminating credit and debt distortions in Ukraine and creating a financial basis for sustainable economic growth) are devised; they refer to development of the national capital market, fiscal policy adjustment, acceleration of the foreign direct investments inflows, shifts in the NBU’s monetary policy, and the management of foreign exchange reserves.https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/14667/IMFI_2021_01_Bogdan.pdfcapital marketdebt sustainabilityfinancial deepeningfinancializationglobal debtmonetary policy |
| spellingShingle | Tetiana Bogdan Vitalii Lomakovych Financialization of the global economy: Macroeconomic implications and policy challenges for Ukraine Investment Management & Financial Innovations capital market debt sustainability financial deepening financialization global debt monetary policy |
| title | Financialization of the global economy: Macroeconomic implications and policy challenges for Ukraine |
| title_full | Financialization of the global economy: Macroeconomic implications and policy challenges for Ukraine |
| title_fullStr | Financialization of the global economy: Macroeconomic implications and policy challenges for Ukraine |
| title_full_unstemmed | Financialization of the global economy: Macroeconomic implications and policy challenges for Ukraine |
| title_short | Financialization of the global economy: Macroeconomic implications and policy challenges for Ukraine |
| title_sort | financialization of the global economy macroeconomic implications and policy challenges for ukraine |
| topic | capital market debt sustainability financial deepening financialization global debt monetary policy |
| url | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/14667/IMFI_2021_01_Bogdan.pdf |
| work_keys_str_mv | AT tetianabogdan financializationoftheglobaleconomymacroeconomicimplicationsandpolicychallengesforukraine AT vitaliilomakovych financializationoftheglobaleconomymacroeconomicimplicationsandpolicychallengesforukraine |