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Journal of Scientific Papers VUZF REVIEW Volume 6, Issue 3, September 2021

Journal of Scientific Papers VUZF REVIEW Volume 6, Issue 3, September 2021

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The Scientific journal “VUZF REVIEW” published from the year 2016, is issued 4 times a year and is a scientific publication on topical problems of science in various areas of economic theory and practice, management, marketing and applied research methods. The journal is international in the essence and scope. All articles pass through the procedure of reviewing by the editorial board. Editorial Board consist of well-known scientists whose activities contributes to the integration of the global scientific community. OUR AUTHORS ARE: Leading scientists; University professors; Graduate students; Students; Foreign researchers; Scientists; Applicants for degrees

The Scientific journal “VUZF REVIEW” published from the year 2016, is issued 4 times a year and is a scientific publication on topical problems of science in various areas of economic theory and practice, management, marketing and applied research methods. The journal is international in the essence and scope. All articles pass through the procedure of reviewing by the editorial board. Editorial Board consist of well-known scientists whose activities contributes to the integration of the global scientific community. OUR AUTHORS ARE: Leading scientists; University professors; Graduate students; Students; Foreign researchers; Scientists; Applicants for degrees

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Journal of Scientific Papers VUZF REVIEW Volume 6, Issue 3, September 2021

  1. 1. ISSN 2534-9228 (online) Journal of Scientific Papers VUZF REVIEW Volume 6, Issue 3, September 2021 https://papersvuzf.net/index.php/VUZF/ Public organization: VUZF University of Finance, Business and Entrepreneurship
  2. 2. VUZF review, № 6(3) – 2021 ISSN 2534-9228 Vol. 6, №3 September, 2021 Founded in 2016 by the VUZF University The editorial board Editor of the publication Ivan TKACH Prof, Dr. of Sciences, Ukraine; Deputy Editor-in-Chief Radostin Vazov Assoc. Prof. PhD, Bulgaria; Igor Britchenko Prof., Dr. of Sciences, Poland; Members of the editorial board Mitko Atanasov Dimitrov Prof., PhD, Chairman of the Academic Council of the Institute for Economic Research of the Bulgarian Academy of Sciences, Bulgaria; Igor Britchenko Prof., Dr. of Sciences, VUZF, Bulgaria; Daniela Bobeva Prof. Dr., Professor at the VUZF, Bulgaria; Mariana M. Petrova Assoc. Prof. PhD, St. Cyril and St. Methodius University of Veliko Turnovo, Bulgaria; Stanislav Dimitrov Assoc. Prof. PhD, VUZF, Bulgaria; Julia Dobreva Assoc. Prof. PhD, VUZF, Bulgaria; Ali Veysel Assoc. Prof. PhD, VUZF, Bulgaria; Desislava Josifova Assoc. Prof. PhD, VUZF, Bulgaria; Manyu Moravenov Assoc. Prof. PhD, VUZF, Bulgaria; Marián Mesároš Prof., DrSc, Rektor, University of Security Management in Košice, Slovakia; Jozefína Drotárová PhD., Vice-rector for Science and Research (Department of Science and Research), University of Security Management in Košice, Slovakia; Petro Gudz Dr. of Science in Economics, Professor, Kujawy and Pomorze University in Bydgoszcz, Poland; Tomasz Wnuk-Pel Poland; Dio Caisar Darma Assist. Prof., Department of Management, Sekolah Tinggi Ilmu Ekonomi, Indonesia; Nataliya Tanklevska Dr. of Sciences, Prof., State Higher Educational Institution "Kherson State Agrarian University", Ukraine; Vitaliy Shapran Professor, Ph.D. in Economics, Member of the National bank of Ukraine Council, Ukraine; Dr Richard Tomlins Associate Head of School, Faculty of Business and Law, Enterprise and Innovation, School of Marketing and Management, United Kingdom; Visiting Professor at the Early Childhood Department, Muhammadiyah University of Ponorogo, Indonesia; Dr Vladimir Danykiv Ph.D. in Economics, Credit Risk Manager, Fly Now Pay Later, United Kingdom; Roman Blizkyi Dr. of Sciences, Prof. of the State University of Management, Member of the Institute of Professional Accountants of Russia (IPAR), Russia; Maksym Bezpartochnyi Dr. of Sciences, Prof. at the Department of Economics, Marketing and International Economic Relations Faculty of Soft Engineering and Business National Aerospace University named after N. Zhukovsky “Kharkiv Aviation Institute”, Ukraine; Olena Chukurna Dr. of Sciences, Professor of State University «Odessa Polytechnic», Ukraine; Viktor Trynchuk Ph.D., Assoc. Prof. of Department of Banking and Insurance National University of Life and Environmental Sciences of Ukraine, Ukraine; Yaroslava (Iaroslava) Levchenko Doctor of Economics, Professor of Kharkiv National Automobile and Highway University, Ukraine;
  3. 3. VUZF review, № 6(3) – 2021 ISSN 2534-9228 e-mail: vuzfreview@gmail.com; tkachivan9@gmail.com https://papersvuzf.net/index.php/VUZF/index, тел. +38(093) 752-81-56 The authors of articles are responsible for the authenticity of facts, quotes, their own names, geographical names, names of enterprises, organizations, institutions and other information. Opinions expressed in these articles may not coincide with the point of view of the editorial board and do not impose any obligations on it. Jurgita Sekliuckiene Professor of International Business, Kaunas University of Technology, Litva; Sudhanshu Rai Associate Professor, Phd, Copenhagen Business School, Denmark; Panagiotis Kontakos Assist. Prof. in International Business & Entrepreneurship, UCLan Cyprus University, Cyprus; Sahure Gonca Telli Prof. Dr., Dean Faculty of Economics and Administrative Sciences Dogus University, Turkey; Mustafa Erdogdu Professor of Department of Public Finance, Marmara University Faculty of Economics, Turkey; Mariam Arpentieva Grand Dr. of Psychological Sciences, Assoc. Prof., Tsiolkovskiy Kaluga State University, Russia; Radmila Pidlypna Dr. of Sciences, Professor, UTEI Kyiv National University of Trade and Economics, Ukraine; Andrii Nikitin PhD, Assoc. Prof., Kyiv National Economic University named after Vadym Hetman, Ukraine; Galina Yasheva Doctor of Economics, Professor, Vitebsk State Technological University, Belarus; Liudmila Bagdonienė Litva; Hans van Meerten Netherlands; Reinhard Magenreuter Germany.
  4. 4. VUZF review, № 6(3) – 2021 ISSN 2534-9228 CONTENT 1 Windfall profits and losses caused by the COVID-19 pandemic Irena Brukwicka, Iwona Dudzik …………….….……………………..………………….…….. 5 2 The establishment of the inflation target and the corridor of fluctuations of the target: analysis of world trends and practice in Ukraine Vitaliy Shapran, Igor Britchenko ……………………………………………………………………………………… 13 3 Improving financial literacy of a selected group in favour of eliminating crime Jozefína Drotárová, Andzej Misiuk, Zuzana Gedeonová …………………………………………………… 20 4 Methodology for assessment of food security of countries Robert Jurczak …………………………………………………………………………………………………………………. 30 5 Theoretical aspect of marketing research of the market and its elements Olha Matviiets, Diana Korpan ..………………………………………………………………………………………… 37 6 Principles, assessment and methods of risk management of investment activities of the enterprise Kateryna Kraus, Nataliia Kraus, Galyna Pochenchuk ………………………………………………………... 45 7 Human resource management in the contemporary enterprises Beata Małgorzata Kudła ………………………………………………………………………………………………….. 59 8 Role of social sphere in ensuring quality of working life Volodymyr Kyryliuk, Ivan Ryabokon ………………………………………………………………………………… 66 9 Authenticity of brands in the marketing commodity policy of the enterprise Maryna Kirnosova …………………………………………………………………………………………………………… 78 10 Financial technologies for bank financial stability management in economical turbulence conditions Maksim Babenko …………………………………………………………………………………………………………….. 90 11 Assessing the impact of globalization on stock market in Ukraine Tetyana Zadorozhna ……………………………………………………………………………………………………….. 100 12 Structural and regional characteristics of the world retail trade leaders Olha Kavun-Moshkovska …………………………………………………………………………………………………. 108 13 Causes and effects of inflation in Poland Irena Brukwicka, Iwona Dudzik ……………………………………………………………………………………….. 119 14 Managing small and medium-sized enterprises in the time of crisis Waldemar Piotr Włoch ……………………………………………………………………………………………………. 126 15 Public-private partnership as a mechanism for effective management of state property Chepelenko Anzhelika ……………………………………………………………………………………………………… 133
  5. 5. VUZF review, № 6(3) – 2021 ISSN 2534-9228 16 Methodical approaches to evaluation of intellectual capital of enterprises Iryna Yepifanova, Diana Hladka ……………………………………………………………………………………… 145 17 The essence of the logistics activities of the enterprise in modern business conditions Halyna Savina, Yuriy Dusheiko, Anastasiia Rozova ………………………………………………………….. 154 18 Food aid in Poland in the years 2014-2019 as an expression of solidarity and European Union support for the national social assistance system Piotr Frączek …………………………………………………………………………………………………………………… 167 19 Economic mechanism of urban passenger transport’s sustainable development Marharyta Bohachenko, Liubov Niekrasova …………………………………………………………………….. 177 20 Ensuring the financial safety of Ukrainian agricultural enterprises in the context of export products and the impact on macroeconomic indicators Maksym Bezpartochnyi, Igor Britchenko, Olesia Bezpartochna…………………………………………. 186
  6. 6. ISSN 2534-9228 (2021) VUZF review, 6(3) Windfall profits and losses caused by the COVID-19 pandemic Irena Brukwicka* А ; Iwona Dudzik B A, B Bronisław Markiewicz State Higher School of Technology and Economics in Jarosław, Czarnieckiego str. 16, Jarosław, 37-500 Poland Received: July 11, 2021 | Revised: July 28, 2021 | Accepted: August 18, 2021 JEL Classification: D12, D22, F23, G51. DOI: 10.38188/2534-9228.21.3.01 Abstract The outbreak of COVID-19 pandemic is a great economic shock, both for the European countries and for the entire world. The subject of the study is the unexpected profits or losses connected with the coronavirus pandemic. The authors of the article focus on the areas affected by losses and the areas, which achieved windfall profits during the discussed period. The purpose of this article is to analyze and evaluate the profits and losses resulting from the ongoing SARS-CoV-2 pandemic. The world economy has been struggling with epidemic phenomena, varying in intensity and extent, since at least the Roman Empire. This is also the case when the global economy is affected by the pandemic. The business environment has radically evolved. The pandemic contributed to losses in many areas, the most influenced fields are the following: aviation, hospitality and tourism. Profits, on the other hand, relate to the Zoom company, which enables and facilitates videoconferencing, it is so important in the case of remote work. Online shops, such as Amazon, have also recorded an increase, especially during the closure of brick and mortar shops. Stock market increases were also observed among companies supplying food and food products. It should be emphasized, however, that the financial situation of individual companies also depends on the principals and permanent contracts. Keywords: crisis, pandemic, collapse, economy, industry, COVID-19 pandemic. Introduction The global reality is constantly changing, causing functioning in different conditions. Uncertainty is one of the consequences of a pandemic, which is also associated (apart from discomfort) with the abandonment of entrepreneurial activities, and thus, with taking conservative decisions. (A. Dolot, 2020). With regard to the number of cases, global scope or time of occurrence, the COVID-19 pandemic appears to be much more severe and endless than the epidemics in the 19th or 20th century. It seems that the economic consequences of today’s pandemic may be underestimated due to globalization. (Ł. Ambroziak and others, 2020). Material and methods In the study it is used the method of observation, including the method of statistical analysis. The COVID-19 epidemic began in November 2019. Although, it was initially predicted that some parts of China and Asia would be affected, the spread of the virus has increased over time. * Corresponding author: А PhD, adjunct, The Bronisław Markiewicz State Higher School of Technology and Economics in Jarosław, e-mail: brukwicka.irena@op.pl B PhD, adjunct, The Bronisław Markiewicz State Higher School of Technology and Economics in Jarosław, e-mail: iwona.dudzik@op.pl March 11, 2020 the World Health Organization declared the COVID-19 epidemic to be a pandemic. In Poland, the first case of COVID-19 was confirmed on March 4, 2020 (A. Dolot, 2020). The chart below shows the loss of revenues in the transport sector in the first half of 2020 5
  7. 7. ISSN 2534-9228 (2021) VUZF review, 6(3) during the coronavirus pandemic. Chart 1. Revenues loss in the transport sector (freight transport) in the first half of 2020 Source: A. Pomykała, Commodity sector during the period of dealing with the effects of Covid-19, „TTS Rail Transport Technology” 2020, No 27, p. 16-19. Initially, the sea cargo transport was decreasing, followed by the decrease in the number of road freight forwarding and rail freight (also intermodal transport) (M. Koralewski, 2020). Transport is an area of the economy that is extremely important in the period of the crisis related to the effects of COVID-19. It is worth noting that the situation of freight carriers is varied, which results mainly from the structure of the portfolio in terms of permanent contracts, as well as from the condition of customers. The situation of freight carriers is also influenced by the prospect of increased economic activity over the next few weeks (M. Koralewski, 2020). The crisis and pandemic losses have not only affected the freight transport sector.Air transport, including our national carriers, also recorded a deficit. At the early stage of the COVID-19 outbreak, carriers transported people who were returning to the country. The aviation industry has almost come to a halt. Losses in the case of Polish air carriers can be observed on the basis of the stock chart presented below. Chart 2. LOT – stock market chart, 2018-2021 Source: Financial services, stooq.pl [Access: 24.03.2021.] At the same time, it is worth pointing out that the aviation industry in Asia is returning to its initial level which was before the outbreak of the pandemic (M. Koralewski, 2020). As it can be seen from the stock chart during the COVID-19 pandemic, the stock quotes of the LOT air carrier have dropped drastically. When analyzing the profits related to the COVID-19 pandemic, one should take into account the Zoom company. Zoom’s share price rose from nearly $ 60 to $ 570. However, in the third quarter of 2020, revenues increased by 367%, thus, net profit increased by 1079%. At the same time, however, the position of Zoom increased its sensitivity to signals coming from the market. The situation is illustrated by the Zoom stock chart showing the company’s results in 2019-2021. (investing.com, 2021). Chart 3. Zoom stock quotations market in 2019- 2021 Source: Financial services, stooq.pl [Access: 24.03.2021.] However, many people use the Zoom platform free of charge and it may lower the gross margin. It has been observed for the last few months. It is indicated nowadays that Zoom has nearly 433,000 customers who employ more than 10 employees. It constitutes an increase of approx. 485%, compared to the year preceding the COVID-19 pandemic. Zoom’s competitor is Microsoft company, which offers the Teams platform, as well as Cisco, which offers the Webex platform (K. Bogacki, 2021). As it was mentioned, the passenger transport sector experienced significant negative effects The rest 54% Europe 36% Asia 10% 6
  8. 8. ISSN 2534-9228 (2021) VUZF review, 6(3) during the first lockdown. Nevertheless, significant profits have been observed for the food delivery. In the third quarter of 2020, there was an increase of 190% compared to the previous year, thus revenues constituted 1.14 billion dollars (Financial Services, 2021). The chart below shows the Uber’s stock prices in 2019-2021. In 2020, almost from the beginning of the COVID-19 pandemic, it has been observed a steady and significant increase. Chart 4. Uber stock-exchange price in 2019- 2021 Source: Financial services, stooq.pl [Access: 24.03.2021.] The Uber’s competitor is Lyft company, which recorded the similar growth during the pandemic. Lyft stock exchange price is presented in the chart below (Financial services, 2021). Chart 5. Lyft stock exchange price in 2019-2021 Source: Financial services, stooq.pl [Access: 24.03.2021.] Each of these companies reacted to market information following the Pfizer company announcement regarding the completion of works on the vaccine. This was only a temporary reaction, as they returned to the increase, as a service sector plays an important role in the global vaccination (Financial Service, 2021). Amazon company has also recorded an increase in profits. It is an American trading company, operating in the form of a joint stock company that was founded in Seattle in 1994. Amazon deals with B2C e-commerce and runs an online store, which is considered the largest in the world (J. Kopeć et al., 2021). Undoubtedly, it can be observed that traders recorded significant profits during the COVID-19 pandemic. The longer brick-and-mortar stores were closed, the greater were growth shares of such companies, as Zalando and Amazon. The pandemic outbreak was beneficial for online trading companies. At the very beginning of the economic shock, their shares went up. The longer the brick-and-mortar stores were closed, the more they increased. Chart 6. Amazon stock exchange quotations in 2018-2021 Source: Financial services, stooq.pl [Access: 24.03.2021.] In addition to the above profits, many industries experienced significant losses because of the COVID-19 pandemic. Hospitality is one of the industries that was significantly affected by the coronavirus. The Marriott International chain, which is the largest luxury hotel chain in the world, can serve as an example. Marriott’s stock market has still not recovered to pre-coronavirus level. The 7
  9. 9. ISSN 2534-9228 (2021) VUZF review, 6(3) situation was not also improved when the restrictions started to be gradually lifted, as people travelled less during summer holidays (J. Kopeć et al., 2021), in comparison to the previous year. The Marriott stock chart is presented below. Chart 7. Marriott stock chart in 2018-2021 Source: Financial services, stooq.pl [Access: 24.03.2021.] In the early months of the COVID-19 pandemic, hotels were lowering prices. But Airbnb company, on the contrary, did not lower the prices, but even increased them in many cities (e.g. in Venice). (J. Kopeć and others, 2021). Tourism companies have also reported losses. An example of such company is TUI, but its financial results were still unsatisfactory before the COVID-19 pandemic. TUI’s debt in September 2020 amounted to nearly EUR 4.2 billion. TUI’s revenues decreased by approx. 58% at that period, which resulted in loss of EUR 3.2 billion. (ttg.com.pl, 2021). The situation of the households and their impact on the economies of individual countries also seem to be of great importance. The first results of the study on this phenomenon show that the number of people working remotely has increased by 100% since the pandemic. At the same time, people missed the daily social interactions and had a fear of social isolation. Although remote work quite efficiently reconciles work and private duties, it also blurs the line between work and intimate life (J.K. Solarz, 2020). In addition, the household budget study from 2018 showed that about 330 thousand student accommodation did not have a computer with Internet access, and 1,320 thousand had less than one computer. This indicates the scale of educational exclusion at the level of over 1.65 million, that is over 35% of all students in Poland (J.K. Solarz, 2020). Chart 8. The possibility of maintaining the household budget until financial problems arise Source: Coronavirus throws people out of work, 2020 [Access 19.06.2021.] Almost every fifth respondent said that he/she has accumulated funds for a maximum of one or two months. The number of the respondents, who said that their savings would allow them to live for three months was comparable. People who did not have any resources for living were the most concerned about financial resources, because they spent all their monthly salary and ran out of money (Chart 8). The data analysis shows that the pandemic has led to a critical global recession. The first quarter of 2021 is recessionary and the same predictions are for the second one, perhaps the second half of the year will show an accelerated pace. In case the pandemic will be brought under control, national economies of some countries will flourish, but there is little chance of a rapid V-shape revival. It seems necessary to take measures to neutralize global disruptions in international trade, such as the abolition of customs duties introduced by the US or China, as well as consistent liberalization of trade. It may seem interesting from an economic point of view that the probability of a deep stagnation in Poland is considered to be lower. Explaining their point of view, the analysts 8
  10. 10. ISSN 2534-9228 (2021) VUZF review, 6(3) emphasize that compared to German economy, Poland is less dependent on export, it has a loose economic connection with China, the tourism and entertainment sector do not have such a significant share in GDP, in comparison to European countries. Moreover, Polish economy is very heterogeneous. According to analysts, faster economic growth in Poland compared to Germany or other Western countries seems to be an additional economy impact factor, and this is a kind of protection against the possible stagnation. The forecasts of the European Commission and International Monetary Fund of 2020 assume great economic growth in 2021 in the EU countries. As for Poland, the forecasts are slightly weaker, and according to these forecasts, we may be one of the least affected by COVID-19 countries in Europe, together with Ireland and Lithuania. The European Commission expects Polish GDP to be slightly below the level from 2019 (-0.2%). The International Monetary Fund estimated data for Poland (from November) within Article IV consultation and forecasts a decrease of 0.8% compared to 2019. This estimation also coincides with the OECD (Organization for Economic Cooperation and Development) forecast for December and predicts that in 2021 Poland’s GDP will be 0.7% lower than in 2019. According to the available data, the impact on the economy of the second wave may be weaker than that of the first wave. The prolonged difficulties in the economy may result in a delay in economic recovery. Additionally, the further aid instruments for industries announced with the extension of the restrictions may significantly strain the previous forecasts (A. Łaszek et al., 2021), (A. Sieroń, 2020). Despite the relatively great reduction of gap in relation to the world’s leading economies, in the projections of the European Commission or OECD estimates, Poland remains an undercapitalized country, in comparison to other countries. Even the rapid economic growth has not improved the situation of Poland. It was in the eighth place from the end among the 27 countries of the European Union in 2019. Bulgaria, Croatia, Romania, Greece, Latvia, Slovakia and Hungary turned out to be poorer (A. Łaszek et al., 2021). Results and discussion The global SARS-CoV-2 pandemic, which has affected the whole world, is an unusual and, unfortunately, a negative phenomenon. It resulted in decline in GDP and in a foreign trade exchange, confusion on stock and commodity exchanges, freezing of labor markets, damaging tourism, gastronomy and hotel industries, as well as media, entertainment, sports and recreation market. The predictions that are slowly coming true indicate that GDP in 2020 and 2021 is lower than that in 2019, and this may result in a recession in the global economy. Its reconstruction will be a long and multi-staged process, and it will be influenced by the mutant virus and by economies of the following countries on the world map: China, the USA or the EU (M. Antonowicz, 2020), (Polish Chamber of Statutory Auditors, 2020). Undoubtedly, since the outbreak of the COVID-19 pandemic, the countries all over the world have been forced to comply with many restrictions imposed by the authorities. A significant number of people were deprived of previous sources of income. The priorities of the consumers themselves have also changed. Summing up the considerations undertaken in this paper, a sudden decline can be observed in the tourism industry, as well as among manufacturers of travel accessories, such as suitcases. The introduced restrictions have also resulted in the decrease in sales - fashion business and wedding fashion sectors, and the demand for wedding dresses, party dresses and suits was also lower because of cancellation of special events (A. Załęska, 2021), (J. Kopeć et al., 2021). The sales of enterprises, which were not focused on online sales, have also declined. It has led to closure of brick-and-mortar stores. As consumers are deeply concern about the impact 9
  11. 11. ISSN 2534-9228 (2021) VUZF review, 6(3) of COVID-19, they are less interested in purchasing the items in shops (A. Załęska, 2021). Thus, it should be emphasized once again that the decrease in income of the companies is influenced by portfolio of regular customers, as well as by financial ability of contractors and employers. Although it was extremely difficult to predict the outbreak of the COVID-19 pandemic, one should create a specific security facility when running a business (regardless of the industry) and determine the procedures to be followed during a crisis. Nearly each type of industry has been affected by pandemic to a greater or lesser extent. It should be remembered, however, that regardless of the main goal of the enterprise, one cannot ignore the signals of the crisis, take ineffective measures, make wrong choices and have no flexibility in actions. If the company has adequate human resources, it would be beneficial to create a crisis team, including employees who are responsible for the basic processes in the company (E. Rutkowski, 2021). It goes without saying that the spread of the virus itself, as well as restrictions on the movement of people caused a kind of economic shock. The pandemic has affected the economy in two ways. Consumption during the lock down periods shrinks, because people either get sick, or make efforts to protect themselves from infection. Under the influence of media reports or conversations with each other, citizens who are negatively prejudiced against hospitalization, self-quarantine without being tested and getting confirmation of the disease. They prefer to stay at home in any case. It results in abandoning their potential travels for various purposes (including tourism) or visiting shopping centers, which in recent years have actually become places of spending their free time. Tourism, transport, catering, leisure and entertainment industries were severely affected by the pandemic in a relatively short time. The best example of the demand effect is the fall in demand for crude oil (less demand, for example, for transport services) and the fall in price. It turned out unexpectedly that for the first time in the history of crude oil trading, the price of a barrel in transactions with a load date for May 2020 in the USA turned negative (M. Antonowicz, 2020), (B. Hadasik, 2021). The algorithms, intentions or premises, which were successfully used in the past, are unlikely to work. In order to get the pre-collapse state, the giant corporations, as well as small companies and businesses have to act quickly. Surely, one should take into account such obstacles as legal acts and regulations that are subject to systematic changes, depending on the adopted policy of a particular country, unstable distribution, negative emotional states of people or changes in consumer behavior with a tendency to limit spending money. The determined business owners who are interested in the stabilization process should focus on action-oriented strategy, including four elements: 1. Setting specific organizational goals, that is specifying common approaches to functioning enterprise in the “normal” operative mode, and fulfillment of immediate actions that will accelerate the entire operation. 2. Prognostication of effects that define the stakeholders’ expectations. 3. Focus on efficient temporary solutions. 4. Skilful time disposal and deliberate choice of the right time to start a business. (deloitte.com/pl, 2021). Many Western companies are aiming at diversification of their sources of partner supplies, marginalizing China’s “mission” as a “global conglomerate”. This may lead to reshoring of production to Western countries, that is Europe, the USA / Canada. Reshoring the supply chains is an idea that coincides with the emergence of globalization, and in the context of the pandemic, it has become very popular due to the widespread opinion that the more articles, goods or products are produced at the local level, the better the economy will be. (Z. Bentyn, 2015). The World Bank breaks down the costs of a pandemic into three categories: 12% of total 10
  12. 12. ISSN 2534-9228 (2021) VUZF review, 6(3) costs is connected with mortality, 28% is caused by absenteeism, and unfortunately, 60% is caused by behavior (fear and avoidance of contagion). The above figures make you think that the COVID-19 pandemic does not need to have the characteristics of a ruthless killer with a high death rate like Ebola, Marburg, HIV, SARS in order to be economically expensive (A. Sieroń, 2020). Conclusions 1. An important consequence of the epidemic from an economic point of view is a negative supply shock. All cataclysms that the current pandemic involves lead to decline in the supply of labor force. It is a temporary phenomenon. It is influenced by illness of the employees or their forced quarantine. The decrease in production, existence of fixed costs, the need to maintain an employee (salaries, insurance) send countries into a kind of debt spiral. As a result, liquidity problems arise and the risk of bankruptcy increases significantly. 2. In the present epidemiological impasse, it seems important to protect sectors of strategic significance for individual economies, as well as assets, technologies and infrastructures, and above all, to focus on protection of employees and their jobs. 3. The enormous costs and expenditures incurred by states to overcome the COVID-19 pandemic illustrate, in a sense, the benefits: human life has become the most important value; the economic growth of individual EU Member States has generated assets for mitigating actions, even as drastic as the quarantine of entire regions, individual sectors and industries; it enables “existence” of business under shared management by providing ongoing liquidity to companies that have been affected by the crisis. 4. The pandemic shows that making savings is very important nowadays (private and public) for rainy days. The pandemic should also make people and businesses aware of the need to diversify. It goes here about sources of income and supply. The problem of many companies was the fact that they were relying on one Asian sub-tier supplier. 5. Economic impasse gives no quarter for many syndicates, corporations, companies, individual or group business activities; despite everything, there are branches to which the reduced tariffs are applied; in some situations, the pandemic rushes and initiates innovative, unusual solutions; following trading profit analysis, one can see which companies are making money from the pandemic; there is troublesome and risky deduction for which businesses are only periodic fluctuations in demand, and not permanent changes; in the future one can see which of the companies will adequately take into account the present situation and turn failures into success. References Ambroziak Ł., Chojna J., Gniadek J., Kępka H., Strzelecki J., Trade routes after a pandemic COVID-19, Polish Economic Institute Publishing House, Warsaw 2020, p. 4. Antonowicz M., Intermodal transport in times of pandemics sars-cov-2. First special report of the portal INTERMODALNEWS.PL, Publisher IntermodalNews.pl, Wroclaw 2020, p. 6. Bentyn Z., Reshoring strategy as a factor shaping global supply chains. Logistics, 2015, No 3, CD 1 | 313-320. Bogacki K., Does Zoom only grow during a pandemic? Available from: https://itreseller.com.pl/czy-zoom- wylacznie-rosnie-podczas-pandemii-okazuje- sie-ze-tworcy-narzedzia-do- wideokonferencji-rejestruja-coraz-nizsza- marze/ [ Access: 23.03.2021.] Dolot A., The impact of the COVID-19 pandemic on remote working – an employee's perspective, "E-mentor" 2020, No 1. Tui Group will receive further support from the 11
  13. 13. ISSN 2534-9228 (2021) VUZF review, 6(3) German government. Available from: http://ttg.com.pl/grupa-tui-otrzyma-kolejne- wsparcie-od-rzadu-niemiec/ [Access: 23.03.2021.] Hadasik B., Macroeconomic analysis of the E- Commerce sector in the face of a covid-19 pandemic using the Pest/Pestel method. Available from: Widening Horizons – Tom XX, cz. I, p. 64-71 https://www.researchgate.net/publication/3489 07818 [Access: 23.03.2021.]; https://pl.grupa tuisting.com/equities/zoom-video- communications [Access: 3.03.2021.]; https://pl.investing.com/equities/zoom-video- communications [Access: 23.03.2021.]; ttps://www2.deloitte.com/pl/pl/pages/human- capital/articles/jak-zachowac-odpornosc-w- biznesie-powrot-do-normalnego-dzialania-po- pandemii.html [Access: 17.04.2021.]; Kopeć J., Makarenko V., Korzeniowska K., Who the pandemic has made money for and who is happy to hear about the vaccine. BIQDATA, Available from: https://biqdata.wyborcza.pl/ biqdata/7,159116,26609909,komu-pandemia- dala-zarobic-a-kto-sie-cieszy-na-wiesc-o- szczepionce.html [Access: 16.12.2021.] Koralewski M., Logistics and mobility during the COVID-19 pandemic, "Expertise" 2020, No4, p. 3-4. Łaszek A., Trzeciakowski R., Zieliński M., Poland, Stagnation or growth? Work, rule of law, investments, innovations. Report under the expert direction of L. Balcerowicz, FOR Warsaw, 2021, p. 54-56. Pomykała A., Commodity sector during the period of dealing with the effects of Covid “TTS Rail Transport Technology” 2020, No 27, p. 16-19. Rutkowski E., COVID-19: how to survive a crisis? Fundamentals of strategic management in a company during a crisis, Available from: https://www.parp.gov.pl/component/conte nt/article/59299:covid-19-jak-przetrwac- kryzys-podstawy-zarzadzania- strategicznego-w-przedsiebiorstwie-w- czasie-kryzysu [Access: 25.03.2021.] Serwis finansowy, Available from: http://www.stooq.pl [Access: 24.03.2021.] Sieroń A., Will the covid-19 pandemic cause the global economy to collapse. University Review on-line. University of Wrocław [Access: 22.06.2021.] Solarz J. K., Waliszewski K., Pandemic or generational war? Finance and financial law. Journal of Finance and Financial Law June 2020, vol. 2(26), p. 105. Impact of the SARS-Cov-2 coronavirus pandemic on the 2019 audit. Polish Chamber of Statutory Auditors, Warsaw 2020, p. 2. Załęska A., What impact does coronavirus have on e-commerce. Available from: https://invette.pl/blog/wplyw- koronawirusa-na-e-commerce/ [Access: 24.03.2021.]. 12
  14. 14. ISSN 2534-9228 (2021) VUZF review, 6(3) The establishment of the inflation target and the corridor of fluctuations of the target: analysis of world trends and practice in Ukraine Vitaliy Shapran * А ; Igor BritchenkoB A National Bank of Ukraine, Instytutska St, 9, Kyiv, 01601, Ukraine B VUZF University, 1, Gusla str., Sofia, 1618, Bulgaria Received: July 10, 2021 | Revised: August 14, 2021 | Accepted: September 28, 2021 JEL Classification: E.31, E.32, E.52, E.58. DOI: 10.38188/2534-9228.21.3.02 Abstract The article presents an analysis of global trends in setting the inflation target and the acceptable corridor of inflation target fluctuations. Inflation targeting is an important attribute of the monetary regime of inflation targeting, its main quantitative parameter. The tendency of the inflation targeting regime in 70 countries all over the world are considered, of which 41 countries have official recognition by the International Monetary Fund (IMF) regarding the inflation targeting regime. It was found that most countries set the inflation target at 5% or below, and the level of the corridor of fluctuations in relative terms hovers around 20-50% of the target value. The latest trends related to changes in the monetary policy of the European Central Bank have been studied, recommendations for determining the acceptable corridor of fluctuations of the inflation target in small and open economies on the example of Ukraine are provided. Keywords: inflation, inflation target, monetary policy, development markets, monetary transmission, prime rates, credit markets, monetary regime. Introduction Nowadays, the monetary regime of the inflation targeting is one of the most popular in the world. National legislation entrusts the central bank with the function of maintaining price stability in many countries. The economic growth and support of full employment are sometimes added to the central bank's functions. But it’s that model that’s gaining popularity, in which maintaining price stability in cooperation with the government, which is responsible for economic growth, especially among central banks that are not issuers of world reserve currencies. By setting an inflation target, the * Corresponding author: A Professor, Ph.D. in Economics, Member of the National bank of Ukraine Council, e-mail: shapranv@gmail.com, ORCID: 0000-0002-1540-6834 B Dr. of Sciences, Professor Higher School of Insurance and Finance, e-mail: ibritchenko@gmail.com, ORCID: 0000-0002-9196-8740 central bank communicates with the market by signaling what inflation rate it wants to see in the future. The actual inflation rate may deviate from the target and the corridor of fluctuation, but, as a rule, in the medium term, the inflation rate should approach the target by entering the corridor. One of the main ideas of the inflation targeting is to influence inflationary expectations of the population and business through the communication with the market by the central bank. But the question arises: what should be the inflation target and the corridor of fluctuations of this target, so that communication tools can best 13
  15. 15. ISSN 2534-9228 (2021) VUZF review, 6(3) influence the expectations of the population and business. The second important issue is the availability and quality of communication tools of the central bank, able to ensure the delivery of the necessary information to the target audience. Material and methods During the study, we used methods: comparison, historical comparison, analogy, historical analogy. Data of 70 countries which are setting inflation targets were processed, of which the IMF recognized 41 countries with the “inflation targeting” monetary regime. The comparison was partly based on the type of the country's market: developed or developing. The comparison took into account that, for example, Ukraine belongs to the small open economies, which has a strong dependence on commodity export prices. The source of the analyzed statistics were central banks, according to news agencies. A practical example of Ukraine From 5 calendar years, while in Ukraine operated inflation targeting, inflation did not fall into the corridor of fluctuations for 2 years: in 2017 and in 2018. Most likely, inflation will not fall into the corridor of fluctuations already in the end of 2021 year: 2015 year – actual inflation - 43,3% - target – no data 2016 year – actual inflation - 12,4% - target – 12,0% +/-3,0% 2017 year – actual inflation – 13,7% – target – 8,0% +/- 2,0% 2018 year – actual inflation – 9,8% – target – 6,0% +/- 2,0% 2019 year – actual inflation - 4,1% - target – 5,0% +/- 1,0% 2020 year – actual inflation - 5,0% - target – 5,0% +/- 1,0% 2021 year – actual inflation – 6,5% for 7 months – target – 5,0% +/-1,0% Quite frequent failure to hit the target and the allowable range for inflation targeting does not add confidence to the inflation target of the NBU. At the same time, it would be fair to assume that the non-targeting of consumer inflation in Ukraine is usually due to force majeure circumstances that do not depend on the monetary component. Although the effectiveness of the monetary regime of inflation targeting since 2015 has been proven by the practice of low inflation in 2019-2020, it must be acknowledged that Ukraine continues to be a country: - With a small, open and raw materials economy, where the risk of external shocks in the domestic market is greater than in most countries with developed domestic markets. The current level of development of the structure of sectoral markets and tools for monetary policy, available to the NBU, reduces the likelihood of successful resistance to external shocks; - With a fairly underdeveloped financial market, where the forward market is just beginning to take shape, and some of its segments (including securitized assets) are absent, which reduces the efficiency of monetary transmission and limits the use of the central bank discount rate as the main instrument of monetary policy. Two factors point to the need to widen the corridor of fluctuations in the inflation target in the light of current global trends, especially in countries where the International Monetary Fund (IMF) has recognized inflation targeting as the official monetary regime. Global trends in the establishment of a fluctuations corridor in the inflation target Monitoring of data on the dynamics of the target by central banks showed that in 2021, compared with 2020, of the 41 countries in which the inflation targeting regime is recognized by the IMF, 3 countries have reduced the inflation target: Brazil (from 4.0% to 3.75%), Indonesia (from 3.5% to 3.0%) and Thailand (from 2.5% to 2.0%). The increasing in the inflation target was not recorded, as a year ago. It is important to note that Brazil in 2019 had an inflation target of 4.25%, ie we observe for 2 consecutive years a decrease in 14
  16. 16. ISSN 2534-9228 (2021) VUZF review, 6(3) this indicator in Brazil, which, incidentally, has suffered quite a lot from the COVID-19 recession (table 1). It should be noted (table 1) that as of early August, a number of countries in which the inflation targeting (IT) regime was recognized by the IMF, had the opportunity to support inflation more than in Ukraine: Ghana (10%), Moldova (6, 5%), Turkey (7%), Uganda (7%) Uruguay (7%). Of the 30 countries that declared their commitment to the inflation targeting regime, the target was higher in such countries as Egypt (9%), Kyrgyzstan (7%), Nigeria (9%), Mongolia (8%) and Tajikistan (9%), Rwanda (8%), Zambia (8%) than in Ukraine. That is, the upper limit of the inflation target range in Ukraine was at a level that was far from “world records” compared to other countries, and could be increased to 7-8%. Table 1. Inflation target in 2020-2021, data for July 12, 2021 COUNTRY 2021 Relative deviation 2020 Relative deviation ALBANIA 3.00% +/-1% 33,3% 3.00% +/-1% 33,3% ARMENIA 4.00% +/-1.5% 37,5% 4.00% +/-1.5% 37,5% AUSTRALIA 2.00% - 3.00% 20,0% 2.00% - 3.00% 20,0% AZERBAIJAN 4.00% +/-2.0% 50,0% 4.00% +/-2.0% 50,0% BOTSWANA 3.00% - 6.00% 33,3% 3.00% - 6.00% 33,3% BRAZIL* 3.75% +/-1.5% 40,0% 4.00% +/-1.5% 37,5% CANADA 2.00% +/-1.0% 50,0% 2.00% +/-1.0% 50,0% CHILE 3.00% +/-1.0% 33,3% 3.00% +/-1.0% 33,3% CHINA around 3.00% - around 3.00% - COLOMBIA 3.00% +/-1.0% 33,3% 3.00% +/-1.0% 33,3% DEM. REP. CONGO 7.00% - 7.00% - COSTA RICA 3.00% +/-1.0% 33,3% 3.00% +/-1.0% 33,3% CZECH REPUBLIC 2.00% +/-1.0% 50,0% 2.00% +/-1.0% 50,0% DOMINICAN REP. 4.00% +/-1% 25,0% 4.00% +/-1% 25,0% EGYPT* 7.00% +/-2% 28,6% 9.0% +/-3% 33,3% ESWATINI 3.00% - 7.00% 40,0% 3.00% - 7.00% 40,0% EURO AREA* 2.00% - <2.00% - GAMBIA 5.00% - 5.00% - GEORGIA 3.00% - 3.00% - GHANA 8.00% +/-2.0% 25,0% 8.00% +/-2.0% 25,0% GUATEMALA 4.00% +/-1.0% 25,0% 4.00% +/-1.0% 25,0% HUNGARY 3.00% +/-1.0% 33,3% 3.00% +/-1.0% 33,3% HONDURAS 4.00%+/-1.0% 25,0% 4.00%+/-1.0% 25,0% ICELAND 2.50% - 2.50% - INDIA 4.00% +/-2.0% 50,0% 4.00% +/-2.0% 50,0% INDONESIA * 3.00% +/-1.0% 33,3% 3.50% +/-1.0% 28,6% ISRAEL 1.00% - 3.00% 50,0% 1.00% - 3.00% 50,0% JAMAICA 4.0%-6.0% 20,0% 4.0%-6.0% 20,0% JAPAN 2.00% - 2.00% - KAZAKHSTAN 4.00%-6.00% 20,0% 4.00%-6.00% 20,0% KENYA 5.00% +/-2.50% 50,0% 5.00% +/-2.50% 50,0% KYRGYZSTAN 5.00%-7.00% 16,7% 5.00%-7.00% 16,7% MALAWI 5.00% - 5.00% - MEXICO 3.00% +/-1.0% 33,3% 3.00% +/-1.0% 33,3% MOLDOVA 5.00% +/-1.5% 30,0% 5.00% +/-1.5% 30,0% 15
  17. 17. ISSN 2534-9228 (2021) VUZF review, 6(3) COUNTRY 2021 Relative deviation 2020 Relative deviation MONGOLIA* 6.00% +/-2% 33,3% <8.00% +/-2% 25,0% MOZAMBIQUE 5.60% - 5.60% - NEPAL 6.00% - 6.00% - NEW ZEALAND 2.00% +/-1.0% 50,0% 2.00% +/-1.0% 50,0% NIGERIA 6.00% - 9.00% 20,0% 6.00% - 9.00% 20,0% NORWAY 2.00% - 2.00% - PAKISTAN 6.00% - 6.00% - PARAGUAY 4.00% +/-2.0% 50,0% 4.00% +/-2.0% 50,0% PERU 2.00% +/-1% 50,0% 2.00% +/-1% 50,0% PHILIPPINES 3.00% +/- 1.0 33,3% 3.00% +/- 1.0 33,3% POLAND 2.50% +/-1.0% 40,0% 2.50% +/-1.0% 40,0% ROMANIA 2.50% +/-1.0% 40,0% 2.50% +/-1.0% 40,0% RUSSIA 4.00% - 4.00% - RWANDA 5.00% +/-3% 60,0% 5.00% +/-3% 60,0% SAMOA 3.00% - 3.00% - SERBIA 3.00% +/-1.5% 50,0% 3.00% +/-1.5% 50,0% SOUTH AFRICA 3.00% - 6.0% 33,3% 3.00% - 6.0% 33,3% SOUTH KOREA 2.00% - 2.00% - SRI LANKA 4.00% - 6.00% 20,0% 4.00% - 6.00% 20,0% SWEDEN 2.00% - 2.00% - SWITZERLAND <2.00% - <2.00% - TAJIKISTAN 7.0% +/-2.0% 28,57% 7.0% +/-2.0% 28,57% TANZANIA 5.00% - 5.00% - THAILAND* 1.00% - 3.00% 50,0% 2.50% +/-1.5% 50,0% TONGA 5.00% - 5.00% - TURKEY 5.00% +/-2% 40,0% 5.00% +/-2% 40,0% UGANDA 5.00% +/-2.0% 40,0% 5.00% +/-2.0% 40,0% UKRAINE 5.00 +/- 1% 20,0% 5.00 +/- 1% 20,0% UNITED KINGDOM 2.00% - 2.00% - URUGUAY 3.00% - 7.00% 40,0% 3.00% - 7.00% 40,0% USA 2.00% - 2.00% - UZBEKISTAN 5.00% - 5.00% - VIETNAM <4% - <4% - WEST AFRICAN STATES 2.00% +/-1% 50,0% 2.00% +/-1% 50,0% ZAMBIA 6.0% - 8.0% 14,3% 6.0% - 8.0% 14,3% Source: centralbanknews.info, IMF, data from central banks It should also be noted that when establishing the fluctuation corridor, the upper and lower ranges have not only such a characteristic as the absolute deviation, which is usually expressed in percentage points, but also the relative deviation, which is expressed as a percentage. So, the analysis of global statistics showed that among the countries in which the IMF officially recognized the IT regime, Ukraine had one of the lowest relative deviations of the fluctuation corridor at 20%. Of the 41 countries where the IMF has recognized IT as the monetary regime, 30 countries had a relative deviation of the fluctuation corridor more than in Ukraine. It is necessary to pay attention to the current inflation target: in Turkey, Uganda and Uruguay – 5% +/- 2.0 p.p. (40%). Here is the notable data for India and Paraguay 4% +/- 2.0 p.p. (50%), Brazil 3.75% +/- 1.5 p.p. (40%). It is 16
  18. 18. ISSN 2534-9228 (2021) VUZF review, 6(3) obvious that the financial markets of Brazil, India and Turkey are more developed than the Ukrainian one, and the economies of these countries are less open to the effects of external shocks. Notes: • In the countries highlighted in yellow, the IMF has officially recognized the inflation targeting regime as a monetary regime, according to the Annual Report on Exchange Arrangements and Exchange Restrictions 2019 10/08/2020. • Countries in semi-bold had a relative deviation of the fluctuation corridor more than in Ukraine • In countries marked with “*”, the inflation target changed upwards or downwards. Summing up the analysis of world practice on the establishment of the inflation target and the corridor of fluctuations of such a target, it is necessary to highlight several identified trends: - in 2020/2021, when observing 70 countries (including the euro area), 3 cases were recorded when the inflation target was reduced; - of the 41 countries in which the IMF officially recognized the IT regime, only 10 countries had a higher target or the same as in Ukraine, in the other 31 countries it was lower than the Ukrainian; - out of 70 countries that set an inflation target, 23 countries had a higher or the same target as Ukraine; - the corridor of target fluctuations in relative terms among 41 countries with officially recognized IT regime in 30 countries was much larger than in Ukraine; - with a decrease in the inflation target in absolute terms, the corridor of permissible fluctuations in relative terms also increased, but there was a group of countries in which were the similar to the Ukrainian target but the corridor of fluctuations in relative deviation was much larger than the Ukrainian 40-50% (in Ukraine 20 %). Additional factors to consider Taking into account the results of the analysis of global trends in the setting of the inflation target and the fluctuation corridor, it should be taken into account that the size of the target itself should have: - economic basis and be a compromise between the factor of price stability and economic growth; - take into account inflationary processes in the economies of trading partners countries. The corridor of fluctuations in the inflation target should not play the role of artificially increasing or decreasing inflation, but should be realistic to achieve, taking into account the available tools of the central bank. Too narrow corridor would lead to more frequent non- target inflation, too wide corridor is likely to lead to a loss of targets for producers and consumers in the domestic market (of course, if economic agents focus on the official level of consumer inflation). Fig. 1. Data on inflation in the MTP countries (main trading partners of Ukraine) and the average consumer price index in the MTP countries – UAwCPI, Source: the NBU inflation report for July 2021 If you look at the level of average consumer inflation in Ukraine's trading partners, it rose in June 2021 to a record 4.2%, although in the second half of 2020 it did not exceed 2.5%. In June, the main inflation peak was observed in Russia 6.5% (target 4%), Turkey 17.5% (target 5%), Belarus 9.9%, Poland 4.2% (target 2.5%) and the United States 5 .4% (target 2%). 0 3 6 9 12 15 18 21 -2 0 2 4 6 8 10 12 01.19 07.19 01.20 07.20 01.21 06.21 UAwCPI EURO-zone Russia Bilorussia Poland USA China Turkey (RHS) 17
  19. 19. ISSN 2534-9228 (2021) VUZF review, 6(3) Fundamental changes in the euro area Among the MTP countries, only the euro area has followed the 2% target, but in 2021 the ECB changed the formulation of the inflation target from “up to 2%” to “about 2%” in the medium term, assuming that inflation may exceed 2%. The changes took place on July 8, 2021 and indicate that the ECB has taken a step towards liberalizing the inflation targeting regime. The 2% figure, according to the ECB, is “symmetrical”, i.e. both positive and negative deviations from it will be assessed as “undesirable”. However, as 2% becomes a “symmetrical target” in the medium term, the markets perceived this change in the ECB's strategy (the first since 2003) as a signal to a possible excess of inflation in the euro area of 2%. Countries with small and open economies on the EU border, such as Ukraine, cannot ignore either the dynamics of inflation in trading partner countries or the changes that the ECB has made for the first time since 2003. The euro area is a promising trading partner of neighboring countries, the share of which will increase over time. Given the growth of UAwCPI and the liberalization of the IT regime in the Eurozone, a number of proposals will be relevant for Ukraine. Results and discussion Our study allowed us to develop a number of recommendations for countries with small, open and commodity economies, which may be worth listening to when implementing the inflation targeting regime. Firstly, countries with small economies do not need to try to set the lowest target with the narrowest possible corridor. If we are talking about a country with an underdeveloped financial market and problems in the operation of monetary transmission, the corridor should be set at 50% of the target. Secondly, when setting the inflation target, it is necessary to clearly link it with the dynamics of inflation in the trading partner countries, taking into account the forecast of such inflation. If inflation in your country is higher than inflation in trading partner countries, it is likely that in the medium term this situation will affect the exchange rate. It is also not necessary to set a target much lower than inflation in trading partner countries. The target must be balanced. Thirdly, central bank communications must be ready for inflation targeting. It is necessary to understand that not only the network of communication channels should work, but also it is necessary to achieve trust and purity of perception of communications at the moment of change of the discount rate. The target audience for such communication is all important economic agents: government, business, population. The effectiveness of such communications must be constantly measured. Fourthly, despite the fact that we found 3 out of 70 cases of lowering the inflation target in 2020/2021, it should be understood that the COVID-19 recession has seriously affected the actual inflation in the world and most likely inflation in the “Central and Eastern Europe” region by the end of 2021 will be much larger than expected. This was not a reason to increase targets, but technically it could be a good time to review the monetary strategy to target inflation. Given what target is currently set in most developed countries, the central bank of each country with an emerging market should try to achieve the ability to set the target at 2%, +/- 1.0 p.p. However, this achievement must be gradual. The country must go through serious stages of preparation for a low target with a narrow corridor, in particular, such stages should include the development of the national financial market and the preparation of the communications system. 18
  20. 20. ISSN 2534-9228 (2021) VUZF review, 6(3) Conclusions Summing up the results of the study, it should be noted that the monetary regime of inflation targeting remains a universal monetary regime to perform one of the main functions of central banks – to maintain price stability. However, it should be recognized that the success of the use of inflation targeting depends on the extent to which the strategy and tactics chosen by the country's central bank correspond to the characteristics of the national (local) economy and the degree of financial market development. The experience of 70 inflation-targeting countries shows that there is no general optimal target level, nor is there a corridor for its fluctuations. The set target should be achievable, and the corridor should be such that market participants, economic agents can trust it. Confidence in the actions of the central bank is the basis of inflation targeting and at the same time a subjective component, which is difficult to measure regularly, but on which depends the behavior of major economic agents. References IMF. World Economic Outlook, July 2021 IMF. Annual Report on Exchange Arrangements and Exchange Restrictions 2019 10/08/2020. Shapran V.S. The Influencing the "virus" crisis on the monetary policy of Ukraine in 2020. Center of research on name of Razumkov. January 2021. Pages 112-115 Shapran V.S., Shapran N.S. Risks of monetary stimulation of economic growth. Center of research on name of Razumkov. March 2019. Pages 126-136 Shapran V.S., Associativity in foreign exchange regulation in Ukraine. Scientific digest of the Financial Research Institute 2018. Pages 89-91 bank.gov.ua tradingeconomics.com centralbanknews.info. 19
  21. 21. ISSN 2534-9228 (2021) VUZF review, 6(3) Improving financial literacy of a selected group in favour of eliminating crime Jozefína Drotárová* А ; Andzej Misiuk B ; Zuzana Gedeonová C A, B, C University of Security Management in Košice, 2373/1, Košťova str., 04001 Košice, Slovakia Received: August 25, 2021 | Revised: September 14, 2021 | Accepted: September 28, 2021 JEL Classification: I0, G5, Z1. DOI: 10.38188/2534-9228.21.3.03 Abstract The aim of this paper is to point out the connections and the relation between financial literacy, poverty and criminal activities in the context of marginalized Roma communities in Slovakia. The target group was selected on the basis of the negative statistics as presented below. Poverty is one of the issues contributing not only to antisocial behavior of Roma communities but also leading them to criminal activities. In the case of the Slovak Roma, 87% of them live in poverty. The marginalized Roma communities are often linked to the so-called petty crime, which is represented by thefts in stores, in groceries, in public means of transport, in the streets etc. The research carried out using the problem analysis method was aimed at the initial structuring of the research field and theoretical and conceptual preparation of tools for detailed exploration. The study also contains an analysis of the financial literacy of the marginalized Roma communities in Slovakia. The survey results of the analysis indicate that the community is lagging behind in the area of the financial literacy and education itself. Only a small percentage of the Roma have completed education that is higher than elementary education. There are about 75% of unemployed Roma that receive material need benefits. Since they are unemployed, they cannot take out a loan in a bank. Therefore, another form of crime is the so-called usury, i.e. loaning money directly in a community and with an extremely high interest rate. There are two areas in the fight against crime caused by low financial literacy that may be regarded as key areas, namely decreasing the level of poverty of the marginalized Roma communities and financial education. The article problematizes the hitherto unknown contexts of connections and the relation between financial literacy, poverty and criminal activities in the context of marginalized Roma communities in Slovakia and original survey focused on analysis of the financial literacy of the marginalized Roma communities in Slovakia. Keywords: financial literacy, marginalized Roma community, poverty, crime, elimination of crime. Introduction Though financial literacy is a relatively new term, the need and necessity for financial education has existed beforehand. These days, however, the need for education related to the financial area is increasing in connection to not only the electronic financial transactions, * Corresponding author: А PhD., Ing., MBA, MPH, Vice-Rector for Science and Research, e-mail: jozefina.drotarova@vsbm.sk, ORCID: 0000-0003-0168-7505 B Doctor of Science, Prof, e-mail: andrzej.misiuk@vsbm.sk, ORCID: 0000-0003-1371-6270 C PhD, Ing., student, e-mail: zuzana.gedeonova@vsbm.sk, ORCID: 0000-0002-6907-4353 market development and a growing number of loans offered by financial institutions, but also to other financial products. The offer of new financial products is at the same time accompanied by an increasing indebtedness of population in most countries. This fact has 20
  22. 22. ISSN 2534-9228 (2021) VUZF review, 6(3) necessitated exact defining the term of financial literacy (Balabán, 2011). Financial literacy is the competence of people dealing with managing their own money. It is a combination of financial knowledge, skills, attitudes and behavior that are necessary for both making reliable financial decisions and achieving financial well-being. (Halilovica et al., 2019) Financial literacy is usually measured on individual levels and is after that generalized into groups representing students of secondary schools, universities, adults or adults on low incomes, pensioners, etc. In his study, Škreblin et al. (2011) define the notion of other form of literacy, namely retirement literacy that includes information and knowledge about the retirement system of a particular country, and the forms of private saving after reaching the third age of life. The study also mentions the link between the financial literacy and savings of the population. This study focuses on a specific target group (marginalized Roma communities) that is characterized by low employment rate, receiving material needs benefits, low level of education and frequent antisocial behavior. Material and methods We have tried to identify the term of financial literacy, its aspects, types and definitions. The method that we have decided to use is represented by analyzing the available domestic and foreign resources, examining the topic itself, and subsequent synthesizing of the information gained. On the basis of the mentioned we have managed to identify the relation between the financial literacy, poverty and committing crimes. The examination of the selected target group (the marginalized Roma community in the Slovak Republic) has been carried out by means of a questionnaire focusing on adults. Analyzing the survey results has brought two pieces of information: 1. identifying problems and a possible connection to committing crimes, 2. proposing improvement possibilities of the given situation. Results and discussion Financial literacy and its aspects Financial literacy can be defined as educating in and understanding of different financial areas, including topics related to the management of personal finances, money and investment. The topic of the financial literacy focuses on the ability of effective managing personal financial matters and also includes knowledge of making right decisions related to personal finances, such as investment, insurance, payment, budgeting, retirement and tax planning (Kelton, 2020). The financial literacy also includes the knowledge of financial principles and concepts, such as financial planning, complex interests, debt management, profitable saving techniques and time value of money. The lack of the financial literacy can lead to bad financial decisions, which can have a negative impact on the financial prosperity of an individual. The main priorities for achieving the financial literacy include the following: gaining the skills of how to create a budget, the ability of monitoring expenses, learning the techniques of how to repay debts, and effective planning for retirement. These steps may also include advice from a financial expert. Education itself within the topic covers the understanding of how money works, setting and achieving financial goals and the management of internal and external financial challenges. The division of financial literacy can be summarized into the following areas: • Monetary literacy – the principle of monetary literacy lies in the competence of managing cash and non-cash resources and carrying out transactions by using means such as payment tools and management of a standard account. • Price literacy represents not only 21
  23. 23. ISSN 2534-9228 (2021) VUZF review, 6(3) competences necessary for understanding price mechanisms and inflation, but it also includes the necessity of basic orientation in the tax system and macroeconomic indicators of the national economy. • Budgetary literacy represents the skills of managing personal and family budgets, setting financial goals, using financial resources, and managing financial assets and liabilities. In addition to the above-mentioned, the financial literacy must also include other literacy elements, such as: • numeric literacy – the need for numeric operations in the process of decision-making; • information literacy – the ability of using, searching for and evaluating relevant information; • legal literacy – orientation in the legal system regarding, for example, making financial contracts (KANTNEROVÁ et al., 2013; ŠKVÁRA, 2011) According to Remund (2010), the financial literacy falls into five categories, namely: 1. knowledge of financial concepts; 2. ability of communicating about financial concepts; 3. competence of managing personal finances; 4. skills in making adequate financial decisions; and 5. trust in effective planning of future financial needs. Johnson E. and M. C. Sherraden, (2007) think that it is more fitting to use the term of financial capability instead of financial literacy. The term financial capability includes financial knowledge and access to financial institutions and services, whereas insufficient financial literacy is also linked to the global economic crisis that has raised awareness of the need for improvement of the financial literacy of the population (Azmi et al, 2014). Key aspects of the financial literacy 1. Budget basics Creating and managing a budget is one of the basic aspects of how to control own finances. These days, creating a budget by means of web pages or applications is easier than ever before. It does not matter if mathematics is one of your strong points. Thanks to adequate applications anybody can manage their finances. And if the applications are used in a proper way, they will inform their user about how the money was used. 2. The Impact of Interest Although finances and transactions are understood in terms of mathematics, it is important also to understand other related aspects. Not only will such a way help saving even more money, but it may also indicate the difference between borrowing a small amount of money and having to return a much larger amount of money. Understanding the impact of interest can have a greater effect on finances than is realized at the moment. Therefore, it is important to consider and understand how much and for what purpose the money to be invested is needed, whether such financial activities are important and how such a situation will be solved in the future. 3. Saving Saving is an important aspect of maintaining a healthy financial status. However, most people do not take into account this aspect as much as they should. It is very easy to ignore things like retirement, because the future seems to be too far away. Early learning how to save money can help gain knowledge, practice and skills useful throughout your life. 4. Loans and Debts As it is relatively easy to take out a loan these days, therefore it is important to gain knowledge about loans, debts, banks, non- banking entities and conditions for taking out and repaying a loan. If a loan is invested in a correct way, it can be extremely helpful. On the other hand, there is a danger of debt, which can represent financial ruining of a debtor for many years. 5. Identity theft issues and security Identity theft is more real than ever before. Since everything is digital, almost everyone shops online, cashless and pieces of financial information are more vulnerable to frauds. Understanding such a concept and the respective preventive measures, e.g. password protection and limitation of the amount of 22
  24. 24. ISSN 2534-9228 (2021) VUZF review, 6(3) information shared online, can be a key condition towards maintaining safe accounts, or otherwise it can lead to financial losses. Therefore, it is important to protect your own financial resources and get information about online accounting in a safe way (HOYT, 2018). Financial literacy in the world and in Slovakia The current financial literacy in the world varies from 20 to 80 per cent of the population of a particular country. Financial literacy seems to be the highest in countries with developed economies, especially in Western Europe and English speaking countries. According to this study, financial literacy in Slovakia is below 50%. However, this fact represents just a comprehensive assessment of adult people irrespective of their detailed specification. Fig. 1. Financial literacy around the world, financial literacy in Europe Source: Howmuch, 2018 Financial literacy, poverty and crime Financial literacy affects all age groups and all social-economic levels. Financial illiteracy causes many people to become victims of predatory loans, mortgages, frauds and high interest rates, which can lead to unsuitable loans or bankruptcy (Investopedia, 2019). A large number of theoretical empirical researches indicate that the expenses meant for social security, namely poverty decrease, contribute to reducing crime. (Bjerk,2010) Low level of financial literacy that is closely linked to the lack of finances can also lead to increasing criminality, especially thefts, assaults and frauds. (Elliott, Ellingwort, 1996; Buck- Hakim,1991). Poverty is one of the issues involved in antisocial behavior. Conditionality of crime and poverty also displays different tendencies in individual types of crime. In case of violent crime, the link to poverty is not so strong. Closer link to poverty has been proven between unemployment, social dependency and property crime. This indicates that property crime manifests a much stronger link to the social-economic situation of an individual than other types of crime. (Tomčíková, 2011; Lubecová, 1996). Marginalized Roma communities represent a concentration of the Roma suffering from deprivation and a high rate of social exclusion. The Roma have been chosen for this paper on the basis of the negative statistics presented below. The results of the research show that whereas 13% of the overall population of the Slovak Republic is at risk of poverty, in case of the Roma living in Slovakia it is 87%. Fig. 2 Property in a marginalized Roma community Source: Vacula,2020 https://www.topky.sk/gl/405205/1713333/Priesku m-priniesol-ohromujuce-statistiky--Takmer-90- percent-Romov-zije-na-hranici-chudoby This fact being based on the second EU- survey and focusing on minorities was presented by the Office of the Commissioner of the government of the Slovak Republic for the Roma communities, together with the European union agency for Fundamental rights (FRA). The survey collected data from nine EU-countries. According to the research, two thirds of the 23
  25. 25. ISSN 2534-9228 (2021) VUZF review, 6(3) Roma aged between 16 and 24 neither study nor work. Preschool facilities are visited only by 34% of the Roma children, and only a quarter of the Roma citizens are employed (Topky.sk, 2016). Fig. 3. Employment rate of the Roma living in settlements densely concentrated in Slovak villages (in percentage terms) The likelihood of committing crime in adulthood is higher if the children grew up in a poverty-stricken environment and they were abused or neglected (Font-Jack, 2020). Contrary to this dominant finding, several recent studies have come to the conclusion that there is no relation between measures having been taken for the purpose of providing expenses meant for social security, and crime. On the contrary, in several cases the social support of the poor has a negative effect on crime (Meloni, 2014). Financial literacy of an individual is closely linked to their financial situation. To avoid financial distress, it is important to distribute financial resources, and have an overview of the prices of goods, services, banking and non- banking entities and their offers, investment possibilities, savings, insurance and other areas related to finances and your property. There are, however, frequent cases when a family budget or budget of an individual gets into negative numbers. In such cases, a solution of how to finance next costs has to be sought. The simplest way of getting finances is to borrow them from a bank or a non-banking entity, even at the cost of providing incorrect information. As long as the loan is being repaid, everything is in order. The problem arises when the loan is not being repaid, and that is why the debtor can get into conflict with the law. Through providing incorrect information in making a loan agreement, debters commit a loan fraud. Many people being in a hopeless financial situation and therefore getting into existential problems, as a result of their own mistake or due to other reasons, such people tend to resort to theft or fraud. Tab. 1 Selected criminal activity in Slovakia between 2014 and 2018 Crime / Year 2018 2017 2016 2015 2014 Thefts (§ 212) 18 078 21331 23329 24882 30 292 Embezzle ment (§ 213) 559 622 706 785 851 Fraud (§ 221) 2 158 2 264 2 312 2 700 3 008 Loan Fraud (§ 222) 312 499 690 1 445 1 673 Source: Statistics of the Ministry of Interior of the Slovak Republic Roma and Crime There is no Roma crime statistic. The idea of recording the crime of the Roma was introduced in 2017 by the former Minister of the Interior of the Slovak Republic after his discovering that although crime in Slovakia in general is decreasing, it is, however, stagnating or even growing in areas with a high Roma population. (Filová, 2017). Causes of the Roma crime arranged from the preschool age to the adulthood: 1. The way of raising Roma children is in many cases fundamentally different from the white majority. Roma children represent means of acquiring finances from the state, and their upbringing is often being neglected, especially in Roma settlements. The upbringing of Roma children is very loose and non-directive. 2. Education for the Roma children at the first and second stages of the compulsory attendance is more an obligation than a form of being educated. 3. Unemployment of the Roma represents a problem for the society as a whole. The reason for the unemployment consists in the lack of their education, and the mutual attitude 24
  26. 26. ISSN 2534-9228 (2021) VUZF review, 6(3) between the white majority and the Roma themselves. Just the unemployment demoralizes and criminalizes the Roma the most. Having just a below average education, the Roma can carry out only manual work, however a considerable part of the Roma considers physical work unacceptable and degrading. One of the main reasons for the unemployment of the Roma is the system of social benefits, which motivates the Roma not to work. 4. Antagonistic relation between the white majority and the Roma. Říčan (1998) refers to this fact as a cold war between the majority and the Roma. His interpretation indicates that the crime being committed by the Roma is a reaction to the war with the “white” dominance. The Roma in our society feel like strangers not willing to accept our norms and values. A manifestation of such a behavior of the Roma reflects racist attitudes on the part of the white majority. 5. Roma culture, folklore and way of life do not have a regular and steady regime. (Ričan, 1998). Analysis of the financial literacy of the marginalized Roma Communities For the purpose of analyzing the financial literacy of the marginalized Roma community, a quantitative survey was used. The information source is represented by a questionnaire; completing the questionnaire was anonymous and voluntary. All respondents were addressed in person and electronically by email and social networks. The questionnaire consists of 19 questions grouped into 4 areas: 1. area of education and employment of the Roma, 2. area of financial situation of the Roma, 3. area of financial education of the Roma, 4. relation of the respondents to financial institutions and loan products. Survey objective: analysis of financial literacy of the marginalized Roma communities Target group: people of the marginalized Roma communities living in Slovakia Evaluation of the survey 218 people aged between 18 and 68 have been addressed and 134 of them have completed the questionnaire. As part of the evaluation, the answers were split into two age categories, specifically 18 – 38 and 39 – 68. The first age category contained 71 respondents, whereas the second category consisted of 63 respondents. 1. Education and employment of the respondents The evaluated data and the answers of the respondents indicate that three quarters of the total number of the respondents have completed the basic education of the second stage, and 17% of the respondents have completed the basic education of the first stage. Secondary education has been completed by 6%, and tertiary by 3% of the respondents. All respondents with completed secondary and university educations are at the age between 18 and 38 years. Unemployment of the respondents is around 72%. Only 18% of the respondents have been employed for longer than 3 years. Unemployment between the age of 18 and 38 years is represented by 76%, whereas between the age of 39 and 68 years is the unemployment present with 67%. In terms of unemployment, 33% of the respondents have been unemployed for less than 3 years, and 30% of the respondents for more than 3 years. About 54% of the respondents receive social benefits, whereas other 18% do not know if they receive any benefits, or they were not able to tell exactly. 28% of the respondents do not receive any benefits at all. 2. Current financial situation of the respondents Only 22% of the respondents are able to cover their monthly expenses by their monthly income. 55% of them are not able to cover their expenses at all, and 23% of the respondents were not able to answer clearly. In the absence of financial resources, 45% of the respondents borrow the missing finances from their family and relatives, 18% of the 25
  27. 27. ISSN 2534-9228 (2021) VUZF review, 6(3) respondents use loan products of banking and non-banking companies, and 37% of the respondents get finances in a different, unspecified, way. The percentage of the answers concerning the lack of a monthly income was as similar in the age classification of the respondents as it was in the overall evaluation. Up to 53% of the respondents spend their monthly income immediately during the first days of a month, namely up to 60% of the total income. Only 21% of the respondents spend less than 30% of their total income during the first days of a month, and 16% of the respondents spend more than 60% (during the first days of a month). At the age between 18 and 38 years, 35% of the respondents spend less than 30% of their income, and at the age between 39 and 68 years, only 5% of the respondents spend less than 30% of their monthly income. 3. Financial literacy 63% of the total amount of the respondents have not encountered financial education yet, and therefore have no relevant information or knowledge of this area, 14% of the respondents have knowledge of this area, and 23% of the respondents were not able to answer clearly. In terms of the age classification of those dealing with information from the area of financial education, 24% of the respondents are at the age between 18 and 38 years, and only 1% at the age between 39 and 68 years. 61% of the respondents answered that it is not important for them to be familiar with the area of finances. 8% of the respondents had a neutral opinion on this matter without having a clear answer. 69% of the respondents aged between 18 and 38 and only 27% of the respondents aged between 39 and 68 place emphasis on financial education within their education. 31% of all the respondents think that financial education is not important, and 20% of the respondents did not have a clear opinion. The question number 12 focuses on the meaning of the term literacy. The results show that 48% of the respondents think literacy is the ability to speak and listen, or to read and write (39%), or to think and to create (25%). 47% of the respondents aged between 18 and 38 and 32% of the respondents aged between 39 and 68 knew the correct answer, namely that literacy is the ability to read and write. 4. The relation of the respondents to financial institutions and loan products 57% of the total number of respondents have a bank account, namely 82% aged between 18 and 38, and only 30% aged between 39 and 68. Internet banking services are used by only 7% of the total number of the respondents and only 3% of the respondents aged between 39 and 68. Of the total number of the respondents, 10% have a loan product from a bank, and 32% from a non-banking company. If the respondents are interested in loan products, they, for the most part, contact a non- banking company. Only 23% of the respondents answered the question about what a credit interest is correctly. The correct answer was known by 11% of the respondents aged between 39 and 68, and 34% of the respondents aged between 19 and 38. 44% of the respondents are of the opinion that they will have to pay higher interest rates to a non- banking company, 30% of the respondents think they will have to pay a higher interest rate to a bank, and 26% of the respondents were not able to answer the question. Conclusions The marginalized Roma communities are often linked to the so-called petty crime, which is in practice represented by thefts in stores, groceries, public means of transport, on the streets and by other form of petty thefts. The petty crime is especially linked to poverty and to the basic needs not being fulfilled, either in case of an individual or their family. However, committing thefts, as a result of having to ensure basic needs, has turned into stealing valuables of the white majority (ŘÍČAN, 1998). As stated above, 87% of the Roma population in 26
  28. 28. ISSN 2534-9228 (2021) VUZF review, 6(3) Slovakia is stricken by poverty. In the fight against the petty crime, it is necessary to focus also on fighting the causes of poverty, especially in risky regions. Unemployment of the Roma is represented by around 72%, whereas only 28% of the Roma do not receive any social benefits from the state. Based on the results as presented above, as well as on the evaluation of another area of the survey of the analytical section of this paper, it is obvious that the financial situation of the Roma is negative. Only 22% of the addressed Roma are able to get by on their monthly income, whereas the rest is forced to borrow money from their family, relatives or financial institutions. This way of money gaining increases the indebtedness of the Roma; up to 37% of them get their missing finances in a different, unspecified way. 57% of all the Roma addressed have a bank account, and only 7% of them use Internet banking services. Various studies show that education is a major factor in favour of reducing crime. (Nguyen, 2019) This fact represents not only classic education, but also investments into science and research. (Zamana et al, 2019) Stango and Zinman (2009) emphasize that those who are not able of correct calculating interest rates based on a current payment have to borrow more money and can save less money. In the area of the financial literacy and overall education, the results of the selected target group are negative. Up to 74% of the total number of the respondents have completed only basic education of the second stage. 63% of the Roma is completely unfamiliar with the area of the financial education, and more than half of them do not place emphasis on familiarization with the respective area. Only 39% of the addressed Roma were able to correctly define the term literacy. Reducing the rate of poverty of the marginalized Roma communities, and financial education appear to be key areas of fighting crime caused by the low financial literacy. In the end, it is important to point to the necessary changes within not only the overall literacy, but also the financial one in case of the Roma fellow citizens, to improve their financial independence and to reduce crime due to their low financial literacy. In this respect, it is necessary to appeal to the increasing of complex education of the Roma children from the first grade of the elementary schools, to monitoring their attendance, and in terms of receiving social benefits to drawing consequences for the parents of children who do not participate in the process of education. It is important to begin with intensive financial educating at the second stage of elementary schools. For this purpose, it is necessary not only to change the structure of the education and legislature in this area, but also to educate teachers. Within educating adults, financial education should represent a compulsory part of the rules related to receiving material needs benefits provided by the Office of social affairs and family, and the financial literacy of the Roma should be also supported by providing them with literature depending on their registration at the Employment office within a specified periodicity. Financial education should also be publicized in some way, and lectures should be given in the field as well. Draft of the concept of the adult education The concept of the financial education including practical advice, exercises, recommendations and a theoretical explanation of the basic terms could be structured into 3 units: 1. Recommendations for the area of domestic management, e.g. recording expenses, looking for ways of how to decrease expenses, prioritizing purchases and motivating the children. 2. Recommendations for the area of creating reserves – regular creating financial reserves in different ways. 3. Recommendations for the area of financial products – overview of the products, basic knowledge, thorough reading of contract conditions, consistency and vigilance. 27
  29. 29. ISSN 2534-9228 (2021) VUZF review, 6(3) References Azmi Abdullah, M., Chong, R.2014 Financial Literacy: An Exploratory Review of the Literature and Future Research, Journal of Emerging Economies and Islamic Research, 2014, Vol. 2, No. Available from: http://www.jeeir.com/v2/images/Vol2No32 014/129-284-1-PB.pdf. Balabán, Z. (2011). Šlabikár finanční gramotnosti: učebnice základních 7 modulu finanční gramotnosti. 2. aktualiz. Praha: Cofet. 416 s. Bjerk, D. Thieves, thugs, and neighborhood poverty, Journal of Urban Economics Volume 68, Issue 3, November 2010, Pages 231-246 Available on: https://doi.org/10.1016/j.jue.2010.06.002. Buck, A. And Hakim, S. (1991), "Are Property Values Being Adversely Affected by Crime?", Journal of Property Valuation and Investment, Vol. 9 No. 1, pp. 37-44. https://doi.org/10.1108/ EUM0000000003296. Elliott, C., Ellingworth, D. (1996), "The relationship between unemployment and crime: A cross‐ sectional analysis employing the British Crime Survey 1992", International Journal of Manpower, Vol. 17 No. 6/7, pp. 81-88. https://doi.org/10.1108/0143772961014935. Font, S.A.-Jack,K.M. (2020),It’snot “Just poverty”: Educational, social, and economic functioning among young adults exposed to childhood neglect, abuse, and poverty, Child Abuse & Neglect, Volume 101, March 2020, 104356 Available on: https://doi.org/10.1016/j.chiabu.2020.10435. Halilovica, S. Zaimovicb, A. Berilob, A.A. Zaimovic, T. (2019), Financial Literacy Assessment in Bosnia and Herzegovina, 3rd World Conference on Technology, Innovation and Entrepreneurship (WOCTINE) Procedia Computer Science 158 (2019) 836–843 10.1016/j.procs.2019.09.121. Available from: https://reader.elsevier.com/reader/sd/pii/S187 7050919312918?token=3B66F969E642BEAC 5BE157E7FFB2F9333BA691C3ED754610C86 5F91309C89879C94F3355864E6AD6ED14AD 8A93BC4F5F Hieu T.M. Nguyen (2019), Do more educated neighborhoods experience less property crime? Evidence from Indonesia, International Journal of Educational Development, Volume 64, January 2019, Pages 27-37 Available on https://doi.org/10.1016/j.ijedudev.2018.12. 005 Howmuch (2018), Visualizing Financial Literacy Rates Around the World. Available on: https://howmuch.net/articles/ financial-literacy-around-the-world Hoyt, E. (20. 5 2018). The 5 Key Components of Financial Literacy. Available from: https://www.fastweb.com/student- life/articles/the-5- key-components-of- financial-literacy Johnson, E., Sherraden, M.S. (2007), "From Financial Literacy to Financial Capability Among Youth," The Journal of Sociology & Social Welfare: Vol. 34: Iss. 3, Article 7. Available from: https://scholarworks.wmich. edu/jssw/vol34/iss3/7 Kantnerová, L., & Et Al. (2013), Finanční gramotnost v České, Polské a Slovenské republice. České Budéjovice: Jihočeská univerzita. 171 s. ISBN 978-80-7394-436-0. Kelton, W. (2020), What Is Financial Literacy? Available from: https://www.investopedia.com/ terms/f/financial-literacy.asp Lubelcová, G.: Sociálna podmienenosť regionálnej diferencovanosti kriminality na Slovensku. Sociológia: 1996, č. 28 s. 575-586, Slovaki Meloni, O. (2014), Does poverty relief spending reduce crime? Evidence from Argentina, International Review of Law and Economics Volume 39, August 2014, p.28-38 Elsevier, https://doi.org/10.1016/j.irle.2014.05.002 Remund, D. L. (2010), Financial literacy explicated: The case for a clearer definition in an increasingly complex economy. Journal of consumer affairs, 44(2), 276-295, https://doi.org/10.1111/j.1745- 6606.2010.01169. Říčan, P. (1998), S Romy žít budeme – jde o to 28
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  31. 31. ISSN 2534-9228 (2021) VUZF review, 6(3) Methodology for assessment of food security of countries Robert Jurczak * А A State University of Applied Sciences in Konin, Przyjaźni 1, 62-510, Poland Received: June 10, 2021 | Revised: August 28, 2021 | Accepted: September 11, 2021 JEL Classification: Q17, Q18. DOI: 10.38188/2534-9228.21.3.04 Abstract A comprehensive assessment of national food security should include an analysis of the physical and economic accessibility of food, the level and quality of nutrition of the population, the sustainability and competitiveness of agriculture, factors and trends of self-sufficiency in the main types of agricultural products, raw materials and food and the effectiveness of foreign trade in food. To assess the food security situation at the state level, it is necessary to conduct monitoring, which consists in determining the deviations of the main indicators from the criteria and thresholds established at the national level. The monitoring should determine the format of the national report on the country's food security. The number of indicators that make up its basis, should be optimal and sufficient to reflect the level of food security of the country and compare them with the situation in other countries. At the same time, it is necessary to analyze trends in ensuring food security at the global level in terms of the progress of countries and regions of the world in achieving the goals of sustainable development in agriculture, the elimination of hunger and poverty for the period up to 2030. Conducting a study of the components of the global food security index, formed at the world level to measure the policy and efficiency of government agencies in the field of food security, is relevant and in demand for positioning the country within the framework of international comparison of countries. Keywords: food security, European Union states, integrated assessment, criteria, indicators, levels, index, products and food quality. Introduction At the present stage, there are several levels of provision of a state with the main types of food. The first level is the state's absolute self- sufficiency in the most important types of food, when domestic demand is less than national agricultural production and there is a possibility of exporting it. The second level is when a country produces only food necessary for domestic consumption, as a rule, by limiting overproduction in order to stabilize food prices and break even agricultural producers. The third level is that the import of food products into the country does not exceed 15- 20% of their annual consumption (optimal import). The fourth level is when about 30% of food consumed in the country depends on imports * Corresponding author: Ph.D. State University of Applied Sciences in Konin, e-mail: robert.jurczak@konin.edu.pl., ORCID: 0000-0002-0546-7385 (the threshold level at which there is already a threat to food security). The fifth level is the state's food dependence on supplies from other countries of the world. Imports exceeding 30% create risks of food crises, increasing impoverishment, natural migration and depopulation of the population. In the EU countries, there are strict restrictions on the import of food products from non-EU countries, both in terms of customs and tariff regulation, and in terms of technical control systems for the safety of imported food. The assortment variety, high quality and availability of food products in these countries are ensured by the absence of customs barriers when moving food products within the EU. The EU countries have developed agriculture and high 30
  32. 32. ISSN 2534-9228 (2021) VUZF review, 6(3) shares of agricultural imports in the domestic market. To assess the state of food security in the world, there are various methodologies based on different sets of indicators. At the international level, since 1996, FAO has been conducting annual monitoring that provides an ongoing analysis of food security in the world, in 2011 an open database was created on the FAOSTAT website, since 2012 the Global Food Security Index has been calculated. The FAO indicator system consists of four indicators: 1) physical availability of food; 2) food affordability; 3) stability of food supply; 4) food consumption. The definitions of indicators representing are given and combined into one statistical database on the FAOSTAT website. Conducting a study of the components of the global food security index, formed at the world level to measure the policy and efficiency of government agencies in the field of food security, is relevant and in demand for positioning the country within the framework of international comparison of countries. Material and methods Assessment of the state of food security of the country, on the one hand, is determined by the stability of the population's access to food, that is: ⁻ physical availability of food, which is understood as the availability of food throughout the country at any time and in the required range; ⁻ economic accessibility of food products, which means that the level of income, regardless of social status and place of residence of a person, allows him to purchase food to maintain an active and healthy lifestyle; ⁻ quality, completeness and balance of nutrition, which implies that food products should be safe for health, the diet should be high in calories and balanced in proteins, fats, carbohydrates, trace elements and vitamins. On the other hand, the level of food security is characterized by the creation of the necessary insurance reserves of food and a reserve of foreign exchange resources necessary to import the missing food, to ensure the country's food independence, which is an important element of national security. In this context, the country's food security is ensured not only by a set of economic and social conditions associated with the development of agriculture and food production, but also by the general state of the national and world economy. There is also significant sectoral differentiation in household income, exacerbated by inequality in food consumption. The stratification of society by the level of income is a threat to the national security of the country and therefore its assessment using income groups by the level of food consumption is also one of the aspects of the work on compiling a system of indicators characterizing food security. The physical availability of basic food products for the population consists in a stable national production of food products, optimal imports, the availability of food products throughout the country, including remote settlements, in an assortment and volume that fully satisfies the demand of the population and corresponds to the recommended consumption rates, at every moment of time. It depends on domestic production, the ability to import food and the level of development of the commodity distribution infrastructure. It should be borne in mind that in the modern world, only raw materials are found on a farm or in the field, a food product is formed in the areas of processing, packaging, storage, transportation and trade. In this connection, even if a country is able to independently produce a significant volume of agricultural products, but does not have a sufficiently developed market infrastructure, the physical availability of food will be low. Often, the functioning and expansion of retail chains leads to monopolization of this market segment, complicating access to it for agricultural producers, maintaining a high level of consumer prices for food. 31

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