IDEAS home Printed from https://ideas.repec.org/a/iaf/journl/y2018i1p124-131.html
   My bibliography  Save this article

Debt Burden of the Financial System of Ukraine and European Union Member-States

Author

Listed:
  • Nataliya Trusova

    (Tavria State Agrotechnological University, Melitopol, Ukraine)

  • Andriy Sihaiov

    (National Technical University of Ukraine 'Igor Sikorsky Kyiv Polytechnic Institute', Kyiv, Ukraine)

Abstract

The tendency to increase the debt burden of Ukraine's financial system has been traced for several years. Domestic methodical recommendations that should suspend the buildup of the debt burden of Ukraine's financial system through effective forecasting, analysis and assessment of changes in the financial markets, have not provided active management of the market share of the budgetary debt at an acceptable level. The purpose of the article is to justify the scenarios in easing the pressure of the debt burden of the Ukraine's financial system, taking into account the elements of public debt management in the countries of the European Union. The peculiarities of the regulating the debt burden of the financial system with the allowable risks of revaluation pressure on the payments balance of the Ukraine and European Union member-states were considered. The methodology used in the research is based on the principles of the relationship between the indicators of economic growth and the indicators of the debt burden of the financial system within the framework of the 'Laffer debt curve' model. The 'Laffer debt curve' shows the dependence of GDP changes on the level of debt burden of the financial system for countries which form economic core of the Eurozone and for new EU members with another level of debt pressure for period 2012-2017. The financial instruments were analyzed, which allow the effective management of debt risks taking into account national characteristics. It was determined that the critical level of permissible pressure of the debt burden of the financial system for the Ukrainian economy is within the limit of 51.2 %. Based on the dynamics of payments concerning the Ukraine public debt, the scenarios of the probable increase the debt burden in the medium-term perspective were estimated. Effective actions have been recommended to borrow and distribute financial resources, risk-based management scenarios for guaranteed state obligations in terms of adjusting debt indicators to the marginal limits.

Suggested Citation

  • Nataliya Trusova & Andriy Sihaiov, 2018. "Debt Burden of the Financial System of Ukraine and European Union Member-States," Oblik i finansi, Institute of Accounting and Finance, issue 1, pages 124-131, March.
    • Handle: RePEc:iaf:journl:y:2018:i:1:p:124-131
    as

    Download full text from publisher

    File URL: http://www.afj.org.ua/pdf/555-borgoviy-tyagar-finansovoi-sistemi-ukraini-ta-krain-chleniv-evropeyskogo-soyuzu.pdf
    Download Restriction: no
    File URL: http://www.afj.org.ua/en/article/555/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wojciech Grabowski & Ewa Stawasz, . "Sovereign Bond Spreads in the EMU Peripheral Countries. The Role of the Outright Monetary Transactions," Prague Economic Papers, University of Economics, Prague, vol. 0, pages 1-14.
    2. International Monetary Fund, 2016. "Portugal: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Portugal," IMF Staff Country Reports 2016/300, International Monetary Fund.
    3. Wojciech Grabowski & Ewa Stawasz, 2017. "Sovereign Bond Spreads in the EMU Peripheral Countries. The Role of the Outright Monetary Transactions," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(3), pages 360-373.
    4. International Monetary Fund, 2016. "Kyrgyz Republic: Second Review Under the Three-Year Arrangement Under the Extended Credit Facility, and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by t," IMF Staff Country Reports 2016/186, International Monetary Fund.
    5. Silvia Ardagna & Francesco Caselli, 2014. "The Political Economy of the Greek Debt Crisis: A Tale of Two Bailouts," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(4), pages 291-323, October.
    6. Thomas J. Holmes, 1998. "The Effect of State Policies on the Location of Manufacturing: Evidence from State Borders," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 667-705, August.
    7. International Monetary Fund, 2016. "Sri Lanka: First Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criterion-Press Release; Staff Report; and Statement by the Executiv," IMF Staff Country Reports 2016/371, International Monetary Fund.
    8. Juha Kilponen & Helinä Laakkonen & Jouko Vilmunen, 2015. "Sovereign Risk, European Crisis-Resolution Policies, and Bond Spreads," International Journal of Central Banking, International Journal of Central Banking, vol. 11(2), pages 285-323, March.
    9. Ardagna, Silvia & Caselli, Francesco, 2014. "The political economy of the Greek debt crisis: a tale of two bailouts," LSE Research Online Documents on Economics 60112, London School of Economics and Political Science, LSE Library.
    10. International Monetary Fund, 2016. "Jamaica: Thirteenth Review under the Arrangement Under the Extended Fund Facility-Press Release and Staff Report," IMF Staff Country Reports 2016/297, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wojciech Grabowski & Ewa Stawasz-Grabowska, 2019. "News Releases, Credit Rating Announcements, and Anti-Crisis Measures as Determinants of Sovereign Bond Spreads in the Peripheral Euro-Area Countries," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 69(2), pages 149-173, April.
    2. Corsetti, G. & Erce, A. & Uy, T., 2017. "Official Sector Lending Strategies During the Euro Area Crisis," Cambridge Working Papers in Economics 1730, Faculty of Economics, University of Cambridge.
    3. Guiso, Luigi & Herrera, Helios & Morelli, Massimo, 2016. "Cultural Differences and Institutional Integration," Journal of International Economics, Elsevier, vol. 99(S1), pages 97-113.
    4. Maxime Menuet & Patrick Villieu & Marcel Voia, 2021. "Does public debt secure social peace? A diversionary theory of public debt management," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(3), pages 475-501, October.
    5. Ferreira, Paulo, 2016. "Does the Euro crisis change the cross-correlation pattern between bank shares and national indexes?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 463(C), pages 320-329.
    6. Mohamed Mehdi Jelassi & Ezzeddine Delhoumi, 2021. "What explains the technical efficiency of banks in Tunisia? Evidence from a two-stage data envelopment analysis," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-26, December.
    7. Gabriel Chodorow-Reich & Loukas Karabarbounis & Rohan Kekre, 2023. "The Macroeconomics of the Greek Depression," American Economic Review, American Economic Association, vol. 113(9), pages 2411-2457, September.
    8. Moritz Rehm, 2022. "Shocks and Time: The Development of the European Financial Assistance Regime," Journal of Common Market Studies, Wiley Blackwell, vol. 60(6), pages 1645-1662, November.
    9. Dumitriu, Ramona & Stefanescu, Răzvan, 2020. "Iluzii financiare, Partea întâi [Financial Illusions, Part 1]," MPRA Paper 101201, University Library of Munich, Germany, revised 17 Jun 2020.
    10. Alogoskoufis, George, 2019. "Greece and the euro: a Mundellian tragedy," LSE Research Online Documents on Economics 102645, London School of Economics and Political Science, LSE Library.
    11. Carmen M. Reinhart & Christoph Trebesch, 2015. "The Pitfalls of External Dependence: Greece, 1829–2015," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(2 (Fall)), pages 307-328.
    12. Kollintzas, Tryphon & Papageorgiou, Dimitris & Vassilatos, Vanghelis, 2018. "Market and political power interactions in Greece: A theory," European Journal of Political Economy, Elsevier, vol. 53(C), pages 59-83.
    13. Konstantinos Gkillas & Dimitrios Vortelinos & Christos Floros & Alexandros Garefalakis & Nikolaos Sariannidis, 2020. "Greek sovereign crisis and European exchange rates: effects of news releases and their providers," Annals of Operations Research, Springer, vol. 294(1), pages 515-536, November.
    14. Luigi Marattin & Tommaso Nannicini & Francesco Porcelli, 2022. "Revenue vs expenditure based fiscal consolidation: the pass-through from federal cuts to local taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(4), pages 834-872, August.
    15. Charles A.E. Goodhart & M. Udara Peiris & Dimitrios P. Tsomocos, 2019. "Debt, recovery rates and the Greek dilemma," Chapters, in: Financial Regulation and Stability, chapter 13, pages 313-326, Edward Elgar Publishing.
    16. Alberto Alesina & Carlo Favero & Francesco Giavazzi, 2019. "Effects of Austerity: Expenditure- and Tax-Based Approaches," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 141-162, Spring.
    17. Prein, Timm M. & Scholl, Almuth, 2021. "The impact of bailouts on political turnover and sovereign default risk," Journal of Economic Dynamics and Control, Elsevier, vol. 124(C).
    18. Feltenstein, Andrew & Mejia, Carolina & Newhouse, David & Sedrakyan, Gohar, 2017. "The poverty implications of alternative tax reforms: Results from a numerical application to Pakistan," Journal of Asian Economics, Elsevier, vol. 52(C), pages 12-31.
    19. Kyriopoulos, Ilias & Nikoloski, Zlatko & Mossialos, Elias, 2021. "Financial protection in health among the middle-aged and elderly: Evidence from the Greek economic recession," Health Policy, Elsevier, vol. 125(9), pages 1256-1266.
    20. Wei Cui, 2022. "Macroeconomic Effects of Delayed Capital Liquidation," Journal of the European Economic Association, European Economic Association, vol. 20(4), pages 1683-1742.

    More about this item

    Keywords

    debt burden of the financial system; GDP; debt burden indicators; currency risks; interest rates; public debt;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iaf:journl:y:2018:i:1:p:124-131. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Serhiy Ostapchuk (email available below). General contact details of provider: https://edirc.repec.org/data/iafkvua.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.