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Journal of Scientific Papers VUZF REVIEW Volume 6, Issue 1, March 2021

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ISSN 2534-9228 (online)
Journal of Scientific Papers
VUZF REVIEW
Volume 6, Issue 1, March 2021
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VUZF review, № 6(1) – 2021 ISSN 2534-9228
Vol. 6, №1
March, 2021
Founded in 2016 by the VUZF University
The editorial boar...

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VUZF review, № 6(1) – 2021 ISSN 2534-9228
CONTENT
1 Forecasting the state of agricultural enterprises based on the
results...

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Journal of Scientific Papers VUZF REVIEW Volume 6, Issue 1, March 2021

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The Journal of Scientific Papers “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 Journal of Scientific Papers “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 1, March 2021

  1. 1. ISSN 2534-9228 (online) Journal of Scientific Papers VUZF REVIEW Volume 6, Issue 1, March 2021 https://papersvuzf.net/index.php/VUZF/ Public organization: VUZF University of Finance, Business and Entrepreneurship
  2. 2. VUZF review, № 6(1) – 2021 ISSN 2534-9228 Vol. 6, №1 March, 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, VUZF, Bulgaria; Igor Britchenko Prof., Dr. of Sciences, VUZF, Bulgaria; 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; Tetiana Cherniavska Dr. Sc. (Economics), Professor of State University of Applied Sciences in Konin, Poland; Tomasz Wnuk-Pel Poland; Dio Caisar Darma Assist. Prof., Department of Management, Sekolah Tinggi Ilmu Ekonomi, Indonesia; Nataliya Tanklevska Dr. of Sciences, Professor, State Higher Educational Institution "Kherson State Agrarian University", Ukraine; Roman Blizkyi Dr. of Sciences, Professor of the State University of Management, Member of the Institute of Professional Accountants of Russia (IPAR), Russia; Maksym Bezpartochnyi Dr. of Sciences, Professor 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; Jurgita Sekliuckiene Professor of International Business, Kaunas University of Technology, Litva; Sudhanshu Rai Associate Professor, Phd, Copenhagen Business School, Denmark; Panagiotis Kontakos Assistant Professor in International Business & Entrepreneurship, UCLan Cyprus University, Cyprus; 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 in Economics, Associate Professor, Kyiv National Economic University named after Vadym Hetman, Ukraine; Yasheva Galina Doctor of Economics, Professor, Vitebsk State Technological University, Belarus; Liudmila Bagdonienė Litva; Hans van Meerten Netherlands; Reinhard Magenreuter Germany. 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.
  3. 3. VUZF review, № 6(1) – 2021 ISSN 2534-9228 CONTENT 1 Forecasting the state of agricultural enterprises based on the results of economic diagnostics Olesia Bezpartochna…………………………….….……………………..………………….…….. 3 2 Methods of assessing the impact of dollarization on economic development Оlena Chukurna ……………………………………………………………………………………………………………… 12 3 An innovative approach to managing the interest margin: economic and statistical analysis of the resource base of a commercial bank Svitlana Andros, Shichao Chang ……………………………………………………………………………………… 26 4 Social Entrepreneurship as an Instrument of Development of Small and Medium Entrepreneurship in Ukraine Oleksandra Lysiuk, Igor Britchenko………………………………………………………………………………….. 38 5 Adapting Russian Accounting to the International Standards: Models, Algorithms, and Amendments Aleksandr Troitskiy, Roman Blizkiy, Irina Rakhmeeva..……………………………………………………. 49 6 The ways of the value assessment the enterprises and the micro- enterprises Maria Borowska……………………………………………………………………………………………………………... 58 7 Marketing strategy of territorial branding in the context of sustainable development Оlena Chukurna, Dmytro Nikolaiev…………………………………………………………………………………. 65 8 Banking innovations: security technology solution Olena Stashchuk, Rostyslav Martyniuk……………………………………………………………………………. 79 9 The development of integrated business structures of Ukraine on innovative and investment basis Natalia Trusova, Oksana Hryvkivska…………………………………………………………………………………. 87 10 Methodological basis of statistical analysis of foreign trade Ilona Dumanska, Olha Matviiets………………………………………………………………………………………. 98 11 Analysis of approaches to determining the cost of production Anatolii Loishyn, Oleksandr Shevchenko, Ivan Troyan, Volodymyr Mazur………………………… 106
  4. 4. ISSN 2534-9228 (2021) VUZF review, 6(1) 3 Forecasting the state of agricultural enterprises based on the results of economic diagnostics Olesia Bezpartochna * А A VUZF University, 1, Gusla str., Sofia, 1618, Bulgaria Received: March 07, 2021 | Revised: March 09, 2021 | Accepted: March 31, 2021 JEL Classification: C53, Q12. DOI: 10.38188/2534-9228.21.6.01 Abstract This article is devoted to the study of information support and methodological tools for economic diagnostics of agricultural enterprises, based on the results of which the cost of resource potential predicted. Determined the factors of influence of the internal and external environment on forecasting the cost resource potential of agricultural enterprises. The methodological toolkit for forecasting the cost resource potential of agricultural enterprises used, taking into account the extrapolation of indicators and the coefficient of change. Built the economic-mathematical models for forecasting the general potential of agricultural enterprises in Ukraine. Proposed the scheme of forecasting the state of agricultural enterprises and complex information support the stages of making managerial decisions by the management of agricultural enterprises. For agricultural enterprises of Ukraine, promising directions for the development of economic activities are proposed. Keywords: forecasting, resource potential, information support, economic diagnostics, agricultural enterprises. Introduction In order to study the state and assess the effectiveness of economic diagnostics agricultural enterprises, an analysis of the formation and use of resources economic entities carried out with the help of appropriate methodological tools and information support, which subsequently serves as the main one for forecasting the state of agricultural enterprises. It should be noted that the functioning of agricultural enterprises is determined by the specifics and characteristics of the activities of economic entities in this area. Accordingly, this reflected in the state, dynamics of the forecasting development of agricultural production and on the results of economic diagnostics of the activities agricultural enterprises. In market conditions and crisis phenomena the economic assessment of the results of economic diagnostics agricultural enterprises * Corresponding author: doctorant VUZF, e-mail: olesyabezpart@gmail.com, ORCID: 0000-0002-0919-2972 makes it possible to forecasting further trends and propose ways to increase the efficiency of using the resource potential, to develop a strategy, as well as directions for the formation of an effective organizational-financial mechanism for economic diagnostics of agricultural enterprises. Carrying out economic diagnostics of the economic activities agricultural enterprises, they monitoring the processes and phenomena occurring in the agricultural sector. The internal environment is a sphere in which specific decisions made regarding agricultural production, the formation of the organizational structure and corporate culture of agricultural enterprises. The external environment is a set of economic entities, economic, social and natural conditions of national and interstate institutional structures, and other external economic entities in the agricultural sector,
  5. 5. ISSN 2534-9228 (2021) VUZF review, 6(1) 4 conditions and factors operating in the global environment. Solving problems related to information support of economic diagnostics in the agricultural sector have found their scientific and practical application in research on management support of agricultural enterprises (Ensslin, L. et al., 2017); support services for innovations in agriculture (Faure, G. et al., 2019); functioning information systems in agricultural enterprises (Látečková, A. et al., 2018); diagnostics and decision-making of the company management within the period of economic crisis and recession (Tomšík, P. et al., 2010) and others. Material and methods To determine the economic condition of agricultural enterprises in the future, they use various forecasting methods and make forecasts based on the results of economic diagnostics. Our analysis of modern approaches to forecasting the state of agricultural enterprises shows that in modern conditions they use normative forecasts that determine the state of an object under the influence of purposeful economic activity. (Bezpartochna, O. et al., 2020). Search forecasts – possible prospects that describe the state of solving problems in the future, are not widely used by economic entities as a justification for the value of indicators economic activity of agricultural enterprises and their effective management decisions. To carry out economic diagnostics agricultural enterprises must have appropriate information support in order to conduct qualitative and quantitative studies of indicators economic activity and monitoring the market environment. Information support of economic diagnostics agricultural enterprises is a system of data and methods of their processing, which make it possible to identify the real activities of an agricultural enterprise, the effect of factors affecting the economic process or performance indicators, as well as the possibility of implementing the necessary management decisions. An important part of the data for economic diagnostics is planned information used as baseline data for assessing the fulfillment of planned targets for agricultural enterprises as a whole and for individual structural units, monthly, quarterly, for a year and other periods. For the studied agricultural enterprises, we propose the preparation of normative and search forecasts by the information and analytical department using such a forecasting method as determining the trend extrapolation. The problems of using methodological tools for forecasting various objects of research at agricultural enterprises have been investigated in publications various scientists. The articles investigated forecasting livestock prices (David, A. et al., 1981), forecasting the demand for agricultural products (Haoxiong, Yang et al., 2019), forecasting sales of agricultural equipment (Krutz, G. et al., 1986), economic forecasting in agriculture (Geoffrey, P., Allen, 1994). Results and discussion Agricultural enterprises in the process of economic diagnostics use planned information about the production program, costs production of agricultural products, the formation and use of resources, profitability, etc. Information support for the economic diagnostics of the external environment agricultural enterprises are indicators that characterize the general economic development of the country, the conjuncture of internal and external markets of agricultural products, the activities of counterparties and competitors. Consider the above indicators in more detail. We divide the indicators characterizing the general economic development of the country into two groups: – indicators of macroeconomic development (volume of revenues and expenditures of the state budget, budget deficit, money emission, inflation index, unemployment rate, minimum
  6. 6. ISSN 2534-9228 (2021) VUZF review, 6(1) wage and subsistence level, etc.); – indicators of sectoral development (the volume of agricultural production, the total value of assets of agricultural enterprises, the total amount of capital, the amount of profit before taxation and net profit of the enterprises of the industry, the price index for agricultural products, the amount of subsidies to producers of agricultural products by their types, etc.). The system of indicators of information support for economic diagnostics of this group, using agricultural enterprises, serve as the basis for assessing and forecasting the conditions of the external environment functioning of economic entities when making effective management decisions. The indicators that characterize the conjuncture of the domestic and foreign markets of agricultural products and are used by agricultural enterprises of Ukraine include the following indicators: supply and demand for types of agricultural products, prices, level of quality of agricultural products, the volume of imports and exports of agricultural products by type, the volume of commodity futures exchanges. The system of indicators of this group used by agricultural enterprises of Ukraine to make informed management decisions in the field of forming their own production program and the volume of sales of agricultural products, determining the cost and selling prices of crop and livestock products. Indicators characterizing the activities of counterparties and competitors and are used by agricultural enterprises include indicators of the activities of banking institutions, insurance companies, suppliers and buyers of agricultural products, competitors. Sources of information about these indicators and the use of agricultural enterprises are the publication of reporting materials in the press and the Internet (for certain types of economic entities), ratings (banks, insurance companies), and paid business information. They used by agricultural enterprises to make effective management decisions on operational economic activities. The conducted studies have shown that in modern conditions is extremely difficult for agricultural enterprises to form information support for economic diagnostics of the external environment, since economic entities experience a shortage of financial resources to collect relevant data, need specialists in analytical research, especially foreign markets for agricultural products, as well as accessibility to technical-communication support of the Internet. Taking into account the practical activities of agricultural enterprises, we have identified the directions of using quantitative methods for the study of economic diagnostics, which manifested in the following: – time series analysis is used by economic entities to take into account the time fluctuations of the studied quantities (study of the main indicators of economic activity by types of production resources); – when using the analysis of cyclicality, entities reveal changes in the studied values associated with the business cycle, namely: determination of supply and demand for agricultural products within the marketing year; – seasonality analysis is used when taking into account the period of sowing and harvesting, raising animals, etc.; – the method of extrapolation trends is used when observing the dynamics of a certain indicator of the enterprise’s activity, determining the trend of its development for the future period; – the forecasting method based on the past is used to determine the volume of activity or other indicator based on the data of the past period to forecasting the likelihood in the future; – the trend correlation method is used by entities in the study of relationship between various trends in order to establish their mutual influence; – regression analysis is used to build a model of the dependence a certain quantity on another or several other quantities. In order to improve the mechanism for assessing results of economic diagnostics the internal environment of agricultural enterprises 5
  7. 7. ISSN 2534-9228 (2021) VUZF review, 6(1) proposed to use economic-mathematical modeling in order to forecasting the total cost of potential taking into account changes in each of its elements, which will allow to reasonably determine the volume of activity and need for a particular production resource. To forecast the resource potential of agricultural enterprises, we will define the main elements and their significance. We have referred to the elements of the resource potential of agricultural enterprises: production stocks, fixed assets, personnel cost, financial resources, which in general constitutes the general potential. Specific features of the economic diagnostics of fixed assets of agricultural enterprises is the determination of optimal ratio between the active and passive parts. This is due to the belonging of agricultural enterprises to crop or livestock complexes. Accordingly, if economic entity of the agrarian sector is engaged in the cultivation of agricultural products, then the share of the active part of fixed assets (agricultural machinery, vehicles, inventory, etc.) must exceed the passive part (warehouses, repair and garage facilities). In the case of agricultural enterprises operating in a livestock complex, the share of fixed assets of the passive part (farms, storage facilities for feed, etc.) should not exceed the active part. Specific features of the economic diagnostics of labor resources when using them in agricultural production are: 1) high proportion of labor operations in the livestock complex, and its gradual reduction in crop production through the introduction of modern progressive technologies in the cultivation of agricultural crops; 2) high proportion of the costs of living labor in the total costs of agricultural enterprises; 3) limiting the possibilities of a narrow professional and technological division of labor. The specificity of the agrarian sector also reflected in features of the economic diagnostics formation of assets and the functioning of the capital agricultural enterprises. In modern conditions, capital formation occurs precisely due to its concentration in the field of agricultural and industrial production, as well as due to investment resources. Most of the large agricultural enterprises are part of holding structures and are included in the integration links in the “production-processing-sale- consumption” chain. Other entities of the agrarian sphere seek to integrate or merge with large economic entities or industrial groups in order to attract working capital and use their own resource potential, etc. The methodology for calculating the forecasting value indicators of the resource potential agricultural enterprises provides for the use of coefficient change, which we determined using the information tools of the Excel spreadsheet processor (TENDENCY function) by studying the change in indicators for the period 2015-2019 compared to the same indicator in 2019. In order to study the state of economic diagnostics, we have selected 10 agricultural enterprises of Ukraine, which carry out the production of crop and livestock complexes, namely: Agricultural Consumer Society (ACS) “Krajany”, LLC named after Vorovsky, Agricultural LLC (ALLC) named after Kalashnika, Subsidiary Research Facility (SRF) “Yuvileiny” PSAA, Agricultural LLC (ALLC) “Zlagoda”, Research Enterprise (RE) “Vital-Agro”, LLC “Poltava-Sad”, Agricultural LLC (ALLC) “Vasilkovskoe”, Subsidiary Research Facility (SRF) “Stepnoye”, Private Agricultural Enterprise (PAE) “Promin”. It should be noted that at the studied agricultural enterprises of Ukraine, the state of economic diagnostics depends on the level of use of methodological tools, methods of conducting economic diagnostics, the possibility of processing accounting and statistical information, the use of modern computer technology, the availability of appropriately qualified personnel, the further use of the results of economic diagnostics in the process of making managerial solutions, etc. (Bezpartochna, O. et al., 2019). 6
  8. 8. ISSN 2534-9228 (2021) VUZF review, 6(1) The influence of environmental factors on the studied agricultural enterprises of Ukraine negatively affects the production of agricultural products, therefore, the forecasting value of production stocks tends to decrease compared to 2019; the coefficient of change is in the range of 0.39-0.65. For the forecast period, not all agricultural enterprises in Ukraine may have a growth trend in fixed assets. Thus, the largest growth rate in the cost of fixed assets is shown by the SRF “Yuvileiny” PSAA and the SRF “Stepnoye” – respectively by 73% and 2.8 times compared to 2019; the forecasted value of the cost fixed assets will amount to 3336 thousand UAH, respectively 32013 thousand UAH. The difficult economic situation and the need to optimize the number of personnel agricultural enterprises in Ukraine can lead to a decrease in the cost of personnel, therefore, its forecast value tends to decrease compared to 2019; the coefficient of change is in the range of 0.38-0.91. For the forecast period, not all agricultural enterprises in Ukraine may have a growth trend in the cost of financial resources. Thus, the highest growth rate of the cost financial resources is observed in the (RE) “Vital-Agro”, ALLC “Vasilkovskoe”, and the SRF “Stepnoye” – by 93%, 69% and 26%, respectively, compared to 2019; the forecasted value of the cost financial resources will be, respectively, 118 thousand UAH, 182 thousand UAH and 129 thousand UAH. For the forecast period, only one agricultural enterprise in Ukraine can have a positive dynamic of growth in the value of the total potential – SRF “Stepnoye”. The growth rate will be 36.0% compared to 2019, and the forecast value will be 40764 thousand UAH. We have built economic-mathematical models for forecasting the cost of elements and the general potential of agricultural enterprises in Ukraine (Table 1). The proposed economic- mathematical models will allow agricultural enterprises in Ukraine to forecasting the cost total potential, as well as adjust the cost each element when the external and internal environment changes. That is, by improving the mechanism for assessing the results of economic diagnostics by using a forecasting system and economic-mathematical modeling, agricultural enterprises are able to optimally determine the need for a particular production resource and calculate the volume of activity. Improving the mechanism for assessing the results of economic diagnostics also allows agricultural enterprises to determine promising areas of economic activity in the future and the magnitude of the economic effect. Table1 – Economic-mathematical models for forecasting the total potential of agricultural enterprises in Ukraine Agricultural enterprises Economic-mathematical models 2019 2020 Deviation 2020 from 2019, (+, -) ACS “Krajany” y = 0,56x1 + 0,38x2 + 0,50x3 + 0,18x4 10250 4361 -5889 LLC named after Vorovsky y = 0,65x1 + 0,62x2 + 0,91x3 + 0,13x4 7758 4661 -3097 ALLC named after Kalashnika y = 0,39x1 + 0,62x2 + 0,62x3 + 0,52x4 35194 17374 -17820 SRF “Yuvileiny” PSAA y = 0,76x1 + 1,73x2 + 0,68x3 – 70,85x4 8416 7851 -565 ALLC “Zlagoda” y = 0,61x1 + 1,07x2 + 0,60x3 – 0,04x4 26321 14299 -12022 RE “Vital-Agro” y = 0,45x1 + 1,00x2 + 0,38x3 + 1,93x4 5326 3225 -2101 LLC “Poltava-Sad” y = 0,53x1 + 0,67x2 + 0,67x3 + 0,48x4 34143 20460 -13683 ALLC “Vasilkovskoe” y = 0,57x1 + 0,81x2 + 0,71x3 + 1,69x4 2511 1690 -821 SRF “Stepnoye” y = 0,48x1 + 2,80x2 + 0,43x3 + 1,26x4 29962 40764 10802 PAE “Promin” y = 0,58x1 + 1,03x2 + 0,68x3 + 0,22x4 10674 6839 -3835 Source: built by the author 7
  9. 9. ISSN 2534-9228 (2021) VUZF review, 6(1) Legend: x1 – the cost inventories, thousand UAH; x2 – the cost fixed assets, thousand UAH; x3 – personnel cost, thousand UAH; x4 – the cost of financial resources, thousand UAH. For agricultural enterprises of Ukraine, promising areas of economic activity are: 1) expansion of sales channels and an increase in sales of agricultural products through the formation a portfolio of orders sellers in the wholesale and retail markets; 2) cooperation with financial-credit structures for the leasing of agricultural machinery and replenishment of working capital; 3) development of export potential through entities of foreign economic activity; 4) mediation with manufacturers and retailers on cooperation in the processing of raw materials and the sale of finished products under its own trademark, etc. The results of study allowed us to develop a scheme for forecasting the state of agricultural enterprises based on the results of economic diagnostics (Fig. 1). With the help of the proposed forecasting system, agricultural enterprises can make various forecasts of the state and development of their own activities based on the results of economic diagnostics. Figure 1 – Scheme of the process of forecasting the state of economic activity and the development of agricultural enterprises Source: suggested by the author In order to improve the organization and methodology of information support for economic diagnostics of agricultural enterprise about the process of making managerial decisions based on the results of forecasting, we proposed the stages of decision-making as organizational, analytical, predictive and effective. The allocation of these stages makes it possible to effective implement the mechanism for formation and functioning of the information Statement of problems and the choice of forecasting methods І. Assessment of the state and position of the enterprise Analysis of the business environment and infrastructure of the agricultural market Assessment of the external environment Assessment the potential of agricultural enterprise ІІ. Determination of directions and development goals Modeling condition scenarios based on probable events Forecasting the state of agricultural enterprise Assessment of alternatives, selection of the most sustainable scenario Selection and formation of development directions in the relevant market ІІІ. Formation of ways to achieve goals Develop of plans for the development of an agricultural enterprise on the market Formation of budget for the implementation of plans for the development of agricultural enterprise on the market 8
  10. 10. ISSN 2534-9228 (2021) VUZF review, 6(1) support system for economic diagnostics of agricultural enterprise in the forecasting process (Fig. 2). Figure 2 indicate that for the practical implementation of the approach we have presented at agricultural enterprises, appropriate forms of information provision (documentary, electronic) must be developed, suitable for its analysis (organizational stage), the procedure for obtaining the results of information assessment (analytical and forecast stages) must be carried out. In general, this will allow agricultural enterprises to form an information model of the research object (productive stage), which provides favorable conditions for the practical application of substantiation methods and effective management decision-making. Figure 2 – Comprehensive information support for the stages of management decision-making of agricultural enterprises Source: suggested by the author Conclusions Thus, the information support economic diagnostics of agricultural enterprises includes data from the internal and external environment of activity. When using the appropriate methodological tools, the main indicators of the activity agricultural enterprises assessed. Information support of the external environment is an appropriate system of indicators that allow agricultural enterprises to study the state of the national economy and macroeconomic indicators, analyze the state and changes in the regulatory framework of activities in the agricultural sector, navigate the The need for user decision making Collection of data about the object of research and their disclosure Economic diagnostics of the information received Determination of probable alternatives for the development of the research object Analytical justification for the development of certain alternatives Choosing a reasonable alternative Practical implementation of the decision The procedure for obtaining the results of assessment information Forecasting indicators of economic activity Information model of the research object Forms of providing information for diagnostics Organizational Analytical Forecast Result Stages of making management decisions Management decision-making process Improvement of information support 9
  11. 11. ISSN 2534-9228 (2021) VUZF review, 6(1) markets of agricultural products and monitor counterparties and competitors. Based on the results of economic diagnostics using information support, agricultural enterprises forecasting the cost of resource potential. The proposed methodological toolkit for forecasting the state of agricultural enterprises in Ukraine based on the method of extrapolating these resources and the coefficient of their change for the corresponding period. The proposed scheme for formation and functioning of the information support system for economic diagnostics of agricultural enterprise allows you to obtain relevant information, analyze it, determine the quality and sufficiency of information, provide it to the management system for making informed and effective decision-making. Comprehensive information support for the stages of managerial decision-making by the management of agricultural enterprises serves as a tool for tracing the stages and the decision- making process in order to improve information support. The information support system of agricultural enterprise is factor of direct influence on the effectiveness of management decision-making. An important direction in the functioning of information support system is the search for effective ways to ensure the efficiency of economic activity agricultural enterprise based on continuous processing of information flows in order to make informed management decision-making. In general, the improvement organizational- financial mechanism of economic diagnostics agricultural enterprises based on the use of methodological tools for studying the factors of the external and internal environment. On the basis of obtained results of forecasting the state and further activities of agricultural enterprises, the effective formation and use of resource potential, optimization of individual elements the resource potential of economic entities, prospects for further development, which will ensure the management decision-making and obtain a positive financial result in the future. References Bezpartochna, O., Britchenko I., Jarosz P. & Radochonska-Jarosz, R. (2019). Study of the modern production and economic relations of the enterprises of agricultural complex in Poltava region, Organizational-economic mechanism of management innovative development of economic entities: collective monograph, Higher School of Social and Economic. Przeworsk, WSSG, 142-153, ISBN 978-83-937354-6-4. Bezpartochna, O. & Britchenko, I. (2020). Diagnostics the economic efficiency of agricultural enterprises, New trends in the economic systems management in the context of modern global challenges: collective monograph, VUZF University of Finance, Business and Entrepreneurship, VUZF Publishing House “St. Grigorii Bogoslov”, 267- 277, ISBN 978-954-8590-85-3. David, A., Bessler & Jon, A., Brandt (1981). Forecasting livestock prices with individual and composite methods, Applied Economics, 13:4, 513-522, DOI: 10.1080/00036848100000016. Ensslin, L., Dezem, V., Dutra, A., Ensslin, S. & Somensi, K. (2017). Management support for agricultural enterprises: a case study for a fruit-producing company, International Food and Agribusiness Management Review, 20(4), 493-510, DOI: 10.22434/IFAMR2016.0152. Erlina, R. & Rialdi, A. (2020). Forecasting model of agriculture commodity of value export of coffee: application of Arima model, Journal Teknik Pertanian Lampung, 9:3, 257-263, DOI: 10.23960/jtep-l.v9.i3.257-263. Faure, G., Knierim, A., Koutsouris, A., Ndah, H., Audouin, S., Zarokosta, E. & Heanue, K. (2019). How to Strengthen Innovation Support Services in Agriculture with Regard 10
  12. 12. ISSN 2534-9228 (2021) VUZF review, 6(1) to Multi-Stakeholder Approaches, Journal of Innovation Economics & Management, 1(1), 145-169. DOI: 10.3917/jie.028.0145 Geoffrey, P., Allen (1994). Economic forecasting in agriculture, International Journal of Forecasting, 10, 81-135, DOI: 10.1016/0169- 2070(94)90052-3. Global Trends to 2035. Geo-politics and international power, Oxford Analytica, September 2017. Available from: https://www.oxan.com/media/1969/global- trends-to-2035-geopolitics-and-power.pdf. ISBN 978-92-846-1494-3, DOI: 10.2861/800293. Haoxiong, Yang & Jing, Hu (2013). Forecasting of Fresh Agricultural Products Demand Based on the ARIMA Model Advance, Journal of Food Science and Technology, 7, 855-858, DOI: 10.19026/ajfst.5.3172. Krutz, G., Iwashita, M. & Doster, D. (1986). Forecasting Farm Equipment Sales in a Declining Market, SAE Technical Paper 861248, DOI: 10.4271/861248. Látečková, A., Bolek, V. & Szabo, Ľ. (2018). Information Systems in Agricultural Enterprises: An Empirical Study in Slovak Republic, AGRIS on-line Papers in Economics and Informatics, 10:2, 49-60, DOI: 10.7160/aol.2018.100105 Nikhila, G. & Padma, K. (2019). Forecasting agricultural commodity pricing using neural network-based approach, International Journal of Business Information Systems, 3:4, 517-529, DOI: 10.1504/IJBIS.2019.101584. Tomšík, P. & Svoboda, E. (2010). Diagnostics and decision-making of the company management within the period of economic crisis and recession, Agric. Econ, 56, 303-309, DOI: 10.17221/53/2010-AGRICECON. Walters, Jeffrey P., Archer, David, W., Sassenrath, Gretchen, F., Hendrickson, John R., Hanson, Jon, D., Halloran, John, M., Vadas, Peter, Alarcon, Vladimir, J. (2016). Exploring agricultural production systems and their fundamental components with system dynamics modelling, Ecological Modelling, 333, 51-65. Zeigler, R. & Mohanty, S. (2010). Support for international agricultural research: current status and future challenges, N Biotechnol, 27(5), 565-72, DOI: 10.1016/j.nbt.2010.08.003. 11
  13. 13. ISSN 2534-9228 (2021) VUZF review, 6(1) Methods of assessing the impact of dollarization on economic development Оlena Chukurna * А A Odessa National Polytechnic University (ONPU), marketing department, Odessa, Ukraine Received: March 06, 2021 | Revised: March 25, 2021 | Accepted: March 31, 2021 JEL Classification: F63. DOI: 10.38188/2534-9228.21.6.02 Abstract The article considers the transformation of the money function as a consequence of the impact of dollarization on the economic development of countries in the global context. The economic substantiation of the process of dollarization of the economy, which is connected with the function of money, is proved. The influence of dollarization on the macro – and macro levels of the economy is substantiated. Approaches to methods of estimating dollarization on the economic development of the country in the context of globalization are proposed. The article defines the degree of dependence of the machine-building industry of Ukraine on the processes of dollarization of the world economy through the use of the effect of transferring the dynamics of changes in exchange rates to the price dynamics in the machine-building industry. Using the ARIMA model, the effect of transferring the exchange rate to prices for mechanical engineering products is proved. The expediency of using the ARIMA forecasting model to predict the further spread of the effect of the change in exchange rates on prices. An approach is proposed to determine the sensitivity of domestic prices for the products of engineering enterprises to changes in the exchange rate through modified elasticity coefficients. It was determined factors affecting the size of the effect of transfer of the exchange rate on domestic prices for the products of machine-building enterprises. Keywords: price dynamics, exchange rate, price indices, dollarization of the economy, indicators of dollarization. Introduction Under the influence of globalization,traditional pricing factors change in their content and content. In addition, there are new factors of global subordination, which should be attributed to uncontrolled factors for the company. In this context, one of the most important trends in globalization, which affects the transformation of pricing factors, is the dollarization of national economies. Dollarization contributes to the emergence of a new pricing factor - changes in exchange rates, which occurs on the methodology and pricing strategy of enterprises and entire sectors of the economy and many countries around the world, especially with economies in transition. Thus, dollarization as a factor of * Corresponding author: Doctor of Economics sciences, Professor of marketing department, e-mail: elenаchukurna@gmail.com, ORCID: 0000-0001-9285-7068 globalization affects all economic levels, starting from the macroeconomic scale and ending with a direct impact on the pricing of enterprises through the effect of the transfer of exchange rates to domestic prices. Dollarization, as a global process, takes place against the background of partial or complete substitution of national currencies by the dollar in the internal settlements of many countries, which is associated with unofficial dollarization. It has been generally accepted among scholars that the problem of dollarization is more inherent in transition economiesor emergingeconomies.This has led to scientific interest in the study of this issue on the example of the analysis of the 12
  14. 14. ISSN 2534-9228 (2021) VUZF review, 6(1) dynamics of dollarization in developing countries. Material and methods The methodological basis of the study is the methods of theoretical generalization - to group the factors influencing pricing in the context of globalization and to determine the transformation of the functions of money in the context of dollarization; semantic-structural analysis - to clarify the conceptual and categorical apparatus of money functions in terms of dollarization Specific research methods: statistical methods - to study the state and dynamics of dollarization through the definition of public debt and its share in GDP; vector autocorrelation model (VAR) and ARIMA model – to assess the degree of effect of the transfer of the dynamics of exchange rates to domestic prices for products of machine- building enterprises. The information base of the study is the fundamental scientific works of domestic and foreign scientists on marketing pricing and globalism, legislative and regulatory documents, official materials of the State Statistics Service of Ukraine, the Ministry of Industrial Policy, information materials of international organizations (IMF, UNCTAD reports), societies and associations. reporting of machine-building enterprises of Ukraine and the EU, open information resources of the Internet, expert assessments, results of own researches. Results and discussion Significant contributions to the study of dollarization of transition economies have been made by scientists such as: Calvo G. R.C. (Calvo, 2002: 379-408), Devereux M. (Devereux, 2006: 478-506), Webber A.G. (Webber, 2000: 71-87), Dobrynskaya V.V. (Dobrynskaya, 2008: 29-62), Delatte A.-L. (Delatte, 2012), Golovnin M.Yu. (Golovnin, 2004: 124-135), Anishchenko A.V. (Anishchenko, 2012: 172-174), Semenov S.K. (Semenov, 2007: 47-51), Piontkovsky R.V. (Piontkovsky, 2007). However, the theoretical aspects of the dollarization of the national economy in these studies require further systematization of factors influencing the spread of the dollarization process and economic justification of the causes and relationships of dollarization and assessment of its impact on the national economy of Ukraine. The problem of dollarization in recent years has gone beyond the world's transition economies. The spread of the dollar as the reserve currency of many countries creates the problem of accumulating a large money supply of the dollar, which has no economic support. In addition, there is the recognition and spread of the dollar as the second national currency in many countries. According to the IMF, in seven countries the dollar is used as the official currency in settlements along with national currencies. In another twelve countries, the share of foreign currencies in official transactions and settlements ranged from 30% to 50% (World Investment Report 2018; International Monetary Fund, 2018). The International Monetary Fund (IMF) refers to semi-officially dollarized countries in which foreign currency acts as a secondary means of payment relative to the national currency. In the global world, there are more than 10 countries with semi-officially dollarized economies: the Bahamas, Bhutan, Brunei, Haiti, Cambodia, Sao Tome and Principe, Lesotho, Liberia, Namibia, the British Crown, the Isle of Man and the Channel Islands (Guernsey and Jersey) (International Monetary Fund, 2018). In the global world, there are also about 20 officially dollarized national economies that use 2 currencies at the same time. For example, countries such as Andorra, the Vatican, Kosovo, Monaco, San Marino, Montenegro, as well as the overseas departments and provinces of France use both the euro and the dollar in their calculations. Liechtenstein uses the Swiss franc and the euro; Kiribati, Nauru, Tuvalu, and the three Australian-controlled territories use the 13
  15. 15. ISSN 2534-9228 (2021) VUZF review, 6(1) Australian dollar and the US dollar; the self- governing territories of Denmark, Greenland and the Faroe Islands use the Danish krone and the US dollar; the unrecognized republic of Northern Cyprus – the Turkish lira and the US dollar. As shown by an analytical study of scientific and practical sources on this issue, the term “dollarization” is associated with the following two areas of economic policy: 1) The process of complete replacement of the national currency by the dollar or official support of the bimonetary system, is the simultaneous functioning of the national currency and the dollar. Such monetary policy is officially pursued by the state (Panama, El Salvador, Ecuador, Palau, the Marshall Islands, the Federated States of Micronesia). 2) The process of economic replacement of the national currency by the dollar, which can be expressed in the use of the dollar as a means of payment in settlements in the domestic markets of national economies. However, this process takes place not only at the official level, but also in the shadow economy. This trend is also reflected in the depository policy of the National Bank, which is dominated by dollar assets and deposits. Which indicates the gradual replacement of the country's assets by the money supply of the dollar. The accumulation of dollar assets inevitably leads to dysfunctional shifts in national assets in the direction of dependence on exchange rate fluctuations. The openness of the national economy to international markets and the action of global factors, its dependence on exchange rate fluctuations while maintaining a negative foreign trade balance of the country, affects the growth of domestic prices in such economies. The most influential structural shifts occur against the background of dollarization in the economies of developing countries or countries with economies in transition. Unconditional is the significant impact of dollarization on the monetary system of the economy, which can be manifested in the following: - If the dollar participates in economic calculations along with the national currency, then there is a transfer of inflationary pressure to the national currency. Which is manifested in the increase in money supply, especially with floating exchange rates, and the promotion of inflation. - Dollarization affects the function of demand for money by increasing the sensitivity of demand to the dynamics of exchange rates, which occurs on its elasticity depending on the interest rate. - Exchange rate volatility increases, as the demand for currency in foreign markets is joined by the demand for currency in the domestic market. This complicates the implementation and regulation by the National Bank of monetary policy and its currency control. - Dollarization has a significant effect due to the accumulation of deposits and loans in foreign currency. If the accumulation of deposits in foreign currency (dollars) increases the dependence on the money supply of foreign currency and the loss of stability of the national currency, then lending reduces credit risk for the banking system. The above issues of dollarization have influenced the formation of scientific opinion on its interpretation. Most scholars who have studied dollarization and formed an economic opinion on its interpretation, hold the view of the official recognition of the dollar as a national currency, which will indicate the full dollarization of the economy. However, the informal use of foreign currency in the national calculations of many countries creates the phenomenon of penetration of the dollar as a means of circulation, payment and accumulation along with the national currencies of such countries. This aspect contributed to the emergence of a new integrative view of dollarization as a gradual process of replacing the national currency. For example, Anishchenko O. V. interprets dollarization as: “the process of distribution and use in the national economy as a means of payment, accumulation, measure of value and means of formation of assets by economic entities of 14
  16. 16. ISSN 2534-9228 (2021) VUZF review, 6(1) foreign currency, regardless of whether partial or complete replacement of national currency in money systems and assets» (Anishchenko, 2012: 172-174). Other scholars have linked this process to the complete replacement of the national currency as a means of circulation, payment, and a measure of value. Thus, Semenov S.K. (Semenov, 2007: 47-51) and Mikhalchuk N.O. (Mikhalchuk, 2016: 68-72) interpreting dollarization, focus on the formation of high inflation in countries where dollarization is widespread. Golovnin M.Yu. also follows the approach to the interpretation of dollarization in the context of foreign currency substitution of three functions (as a measure of value, means of circulation and means of payment), which performs the national currency in the economy (Golovnin, 2004: 124-135). In this context, his research focuses on the solved problems of economic measurement and assessment of the degree of dollarization and is based on the formation of indicators of dollarization of the country's economy. While acknowledging the significant contribution of scientists to the study of the problem of dollarization of the economy, some aspects of this problem are debatable. According to the author of this study, when defining the concept of dollarization, it is necessary to take into account not only the official signs of dollarization, but also the degree of substitution of foreign currency functions performed by the national currency in the economy. In addition, none of the scholars working on this issue link dollarization with the transformation of pricing methodology and do not separate or justify it as a factor influencing pricing. The author understands the term “dollarization” as the process of complete replacement of all five functions of money by foreign currency, which contributes to the accumulation of money supply of foreign currency as an asset and reserve currency. This process affects the spread of inflationary pressures and the spread of the effect of transferring exchange rate fluctuations to external and domestic prices within the national economy. Thus, the economic justification of the process of dollarization of the economy is associated with the functions of money, which are changing. Consider the transformation of the functions of money in the context of dollarization of the economy. Traditional economic theory defines five functions of money: as a measure of value; as a means of circulation; as a means of calculation; as a means of accumulation and storage and world money. Dollarization of the national economy can be justified through the transformation of the function of money, which is manifested in the following. 1) The replacement of the function of money as a measure of value contributes to the spread of the use of foreign currency in shaping the value of goods produced within the national economy. Given that the value of a commodity consists of the socially necessary labor costs that have been expended on its production, this function measures these costs in a single currency. If we take into account the trend of dollarization, the formation of value is directly influenced by the exchange rate and the dynamics of its change. Thus, the cost of factors of production within national economies becomes vulnerable to exogenous factors, namely exchange rate fluctuations. Given that the exchange rate depends on many factors of macroeconomic nature, the formation of the value of goods is subject to other laws of economics. The transformation of factors influencing the price needs a separate substantiation, because the price is a monetary expression of the value of the goods. Changing the pricing system in the conditions provided by dollarization depends on the formation of value. In addition, there is a need to compare prices of different goods requires the reduction of the price system to their expression through a single currency, which will then be adjusted for the exchange rate. These processes are complicated by the difficulty of calculating the price in cases where companies use imported raw materials for 15
  17. 17. ISSN 2534-9228 (2021) VUZF review, 6(1) production. 2) Replacement of the function of money as a means of circulation occurs due to hyperinflation. The increase in inflation encourages market participants to switch to mutual settlements in foreign currency, which is the result of high costs of using the national currency. The spread of foreign currency as a means of circulation contributes to the full or partial replacement of the national currency in the calculations. Thus, there is a process of dependence of the formation of real prices on the exchange rate. 3) Replacement of the function of money as a means of accumulation and storage is carried out through the use of assets in foreign currency. If the majority of assets in national accounts, including deposits, are concentrated in dollars, then in fact there is a process of informal dollarization, which is manifested through the replacement of this function of money. Of course, the accumulation of savings and assets in foreign currency is a measure of insurance against currency risks, but, at the same time, is a means of contributing to the dependence of the economy on demand for foreign currency. It is through the indicator of the level of deposits and assets denominated in foreign currency that the level of dollarization of the country's economy is determined. This approach is common. 4) Replacement of the function of money as a means of payment, which has the following manifestation. The function of money as a means of payment is used in servicing credit relations. It mediates the movement of goods and capital and is used in credit operations, bank settlements, wage payments. Historically, this feature is associated with the occurrence of installments and lending when buying goods. When selling goods on credit, debt obligations become a means of circulation, the repayment of which requires the use of money as a means of payment. Thus, money as a means of payment completes the exchange process, repaying debts, at the same time, as a means of circulation, they are an intermediary in the exchange of goods. If this function of money is replaced by the use of foreign currency, then there is a full or official dollarization of the economy. The level of settlements in foreign currency in the amount of domestic settlements in the country's economy also determines the level of dollarization. 5) The function of world money is carried out in the context of international economic relations, when money is used to determine world prices and as an international means of payment and to form the country's foreign exchange reserves. In fact, this function requires money to perform all previous functions internationally. In practice, the function of world money is performed only by the currencies of those countries that have been recognized by the IMF as reserve currencies (US dollar, pound sterling, Chinese yuan, euro, Japanese yen). The quotations of these currencies are quoted on the basis of floating exchange rates, which are determined by the supply and demand for these currencies. According to the Jamaican monetary system, the introduction of special drawing rights involves the formation of a basket of currencies, which depends on the share of each currency in international trade and its contribution to world gross domestic product. Despite the possibility of an annual review of the shares of currencies in the basket of currencies, the leadership has remained for many years on the US dollar. According to the IMF Annual Report, from October 1, 2016, the ratio of currencies in the "currency basket" is as follows: the US dollar - 58.2%; euro - 38.6%; Chinese yuan - 10.2%; Japanese yen - 11.9%; British pound sterling - 8.5%. This trend creates demand for this currency in international settlements in world trade (International Monetary Fund, 2018). The abandonment of the gold-currency standard in 1973 actually contributed to the emergence of an approach to determining the exchange rates of national currencies based on the ratio of prices in these currencies for a basket with the same set of goods. However, the existing difference in the cost of producing the 16
  18. 18. ISSN 2534-9228 (2021) VUZF review, 6(1) same goods in different countries makes such an equivalent an unreliable international measure of value. Thus, the rejection of the gold-currency standard, due to the fact that the development of the scale of commodity production was not ensured by the presence of such a mass of gold. The situation was exacerbated by the spread of paper and electronic money, increasingly separating the value of money from its gold equivalent. In our opinion, this situation is becoming the foundation of the dollarization of the world economy. In this context, the dollar begins to perform all the functions of money, establishing itself as the main currency in international settlements. In addition, the functions of the dollar as a world currency become the global function of money, as dollarization can be done legally when countries with economies in transition officially implement the transition dollar as a domestic currency. This aspect creates the preconditions for the emergence of the global function of money, which is more widely used than world money, through the legalization of a currency on a global scale and its recognition as the national currency of most countries. In addition, the emergence of digital currencies, among which a significant place belongs to cryptocurrencies, which are generally decentralized, form the basis of the global function of money. The generalization of the substantiation of the transformation of the functions of money proves that the substitution of all five functions of money can lead to the complete dollarization of the economy. Full dollarization of the economy occurs in conditions of complete replacement of all functions of the national currency by the reserve currency (dollar). In this context, it should be noted that countries that pursue a policy of dollarization and do not have the opportunity to receive seigniorage, fully supporting the dollar as a world currency, give the United States the opportunity to receive quasi-money. The general analysis of the degree of dollarization of the Ukrainian economy, conducted on two groups of indicators, reflecting the replacement of the functions of money as a means of payment and the functions of world money, allowed us to draw the following conclusions. According to the calculations of the coefficients of credit dependence of the population and the dependence of the national economy on loans from international funds, the Ukrainian economy can be attributed to economies with a high degree of dollarization. Currently, the dependence of the Ukrainian economy on IMF loans is quite significant. Moreover, in recent years there has been an effect of accumulation of public debt, in 2017 its share was almost 72% of GDP. By the period 2018-2019, there is a slight decrease in these indicators (Fig. 1). Fig.1. Dynamics of change in the share of public debt of Ukraine relative to GDP for the period 2010-2019 (%) 17
  19. 19. ISSN 2534-9228 (2021) VUZF review, 6(1) Source: improved on the basis (State Statistics Service of Ukraine) Over the past eight years, the dollarization ratio has tended to increase, but it reached a critical point in 2014, when the share of public debt relative to the country's GDP was 69.4%. The gradual increase in this indicator in the following years demonstrates the increase in Ukraine's dependence on foreign lending and the lack of economic growth. The state- guaranteed debt also increased during this period, but in 2017 its share almost approached the level of 2010. The analysis of dollarization indicators at the macro level allows us to conclude that Ukraine's economy is highly dependent on dollarization processes. A fundamental issue in the transformation of economic laws is the study of the mechanism by which one can assess the degree of dollarization of the economy at the enterprise level. This mechanism is based on the pricing process. It is through the price system at the micro level that the ultimate effect of dollarization on the activities of economic sectors is reflected. In this context, the issue of studying the effect of the transfer of changes in the exchange rate to domestic prices for the products of enterprises operating within the framework of the national economy is actualized. If this effect is relatively high, then we can conclude that the economy is highly dollarized. This effect is the indicator that allows you to determine the level of dollarization at the micro level or at the level of individual industries. The pass-through effect on prices means that fluctuations in the exchange rate of the national currency are reflected at the level of domestic prices of sectors of the economy. The main reason for the pass-through is the change in producers 'costs, expressed in buyers' currency, when the exchange rate changes. The most accurate definition of the exchange rate pass-through is provided in the scientific works of P. Goldberg and M. Knetter: “The exchange rate pass-through is the change in the prices of imported goods as a percentage, expressed in the national currency of the importing country, depending on the one- percent change in the exchange rate between the country -exporter and importing country” (Goldberg & Knetter, 1997). Exchange rate transfer is always carried out using the following mechanisms: - Direct effect. According to this approach, a change in the exchange rate of the national currency (for example, the hryvnia) to the currency of the importing country leads to a change in the producer's costs expressed in the national currency. This, in turn, forces exporters to change the prices of their goods. - Indirect effect (indirect). This approach involves the transfer of exchange rate changes to the factors of production of the importing country. In this case, the effect of changes in the exchange rate on the goods of national producers is observed, both in the consumer market and in the market for industrial goods. - The indirect effect of foreign direct investment (FDI), which is associated with the transfer of foreign production to countries with relatively cheap currencies in order to save costs for factors of production. This will lead to an increase in the demand for labor, wages and prices in this economy. If there is a complete dependence of the price level on the exchange rate, then it can be argued about the full pass-through effect (at the level of 100%). This result indicates a single exchange rate elasticity of domestic prices. In practice, the pass-through effect is incomplete if its level is less than 100% or E <1. Based on this approach, the effect of the exchange rate pass-through on the internal prices of enterprises should be understood as the degree of price sensitivity to a 1% change in the exchange rate. If there is a complete transfer of the exchange rate of currencies to domestic prices, then there is a complete elasticity of prices depending on the exchange rate, which can be expressed through a coefficient presented in the form of the formula: 𝜀 = | 𝛥Р Р ÷ 𝛥К К |, (1) 18
  20. 20. ISSN 2534-9228 (2021) VUZF review, 6(1) where: Р  – changes in domestic prices; Р – average value of domestic prices, Р= (P1+P2)/2; К  – differences in foreign exchange rates; К – average value of exchange rates for the period, К = (К1+ К2)/2; The interpretation of the coefficient of elasticity of domestic prices from changes in the exchange rate of currencies is to determine the degree of price sensitivity in percent relative to the rate of change in exchange rates. If E = 100%, there is a complete sensitivity of domestic prices to the exchange rate and there is an absolute pass-through of exchange rates on the domestic prices of enterprises. In addition, the effect of exchange rate pass- through on prices is reflected in the degree of interchangeability between domestic and imported goods. With significant fluctuations in exchange rates, the rise in prices for imported products forces buyers to switch demand to domestic counterparts. The degree of interchangeability between domestic and imported goods can be determined using the modified coefficient of cross-elasticity of demand, which is determined by the following formula: 𝜀 = | 𝛥𝑄в 𝛥𝑃і × Рв 𝑄𝑖 |, (2) where: 𝑄𝑖 – sales of domestic goods product group in the commodity market;  𝑄𝑖 – change in the volume of domestic goods of this product group in the commodity market; 𝑃і – the price of the imported product in this commodity market; 𝛥𝑃𝑖 – increase the price of imported goods in this product market. Cross-elasticity coefficient shows the percentage change in demand for domestic goods while increasing the price of imported goods due to the increase in the exchange rate. If E> 0, then the goods are interchangeable, which indicates a high degree of demand switching for domestic goods with an increase in prices for imported goods, due to an increase in the exchange rate. This confirms the high degree of sensitivity of demand with the effect of pass- through of changes in exchange rates to import prices. If E < 0, then such goods are mutually complementary, that is, an increase in prices for imported goods due to changes in exchange rates will lead to a drop-in demand for goods from domestic producers. This will also confirm the indirect impact of exchange rate pass- through on enterprise prices. If E = 0, then the goods are independent from each other and the effect of exchange rate pass- through does not affect demand in any way. In the study, the coefficients of elasticity of domestic prices for finished products of machine-building enterprises from changes in the exchange rate were calculated (Table 2). Table 2. Calculations of the coefficient of elasticity of domestic prices for finished products of machine-building enterprises of Ukraine for the period from 2014 to 2018 Year Price change The average price Change in exchange rates Average exchange rate The rate of change in price The rate of change of exchange rate differences The value of the coefficie nt of elasticity 2014 (І) 38 733 0,71 8,345 0,051 0,085 0,61 2014 (ІІ) 23,05 763,525 2,6 10 0,030 0,26 0,12 2014 (ІІІ) 43,92 797,01 -3,07 9,765 0,055 -0,315 -0,17 2014 (ІV) 75,83 856,885 6,27 11,365 0,088 0,55 0,16 2015 (І) 545,2 1167,4 7,8 18,4 0,467 0,42 1,10 2015 (ІІ) 99,3 1489,65 -0,2 22,2 0,066 -0,009 -7,4 2015 (ІІІ) 29,5 1554,05 0 22,1 0,018 0 0 19
  21. 21. ISSN 2534-9228 (2021) VUZF review, 6(1) Year Price change The average price Change in exchange rates Average exchange rate The rate of change in price The rate of change of exchange rate differences The value of the coefficie nt of elasticity 2015 (ІV) -114,8 1511,4 0,3 22,25 -0,075 0,013 -5,6 2016 (І) 208,49 1558,245 3,1 23,95 0,133 0,129 1,03 2016 (ІІ) 346,91 1835,945 -0,6 25,2 0,188 -0,024 -7,9 2016 (ІІІ) 50,9 2034,85 0,3 25,05 0,025 0,012 2,09 2016 (ІV) 88,4 2104,5 0,5 25,45 0,042 0,019 2,14 2017 (І) 53,43 2175,415 1,2 26,3 0,024 0,045 0,54 2017 (ІІ) 99,07 2251,665 -0,75 26,525 0,043 -0,028 -1,56 2017 (ІІІ) 151,8 2377,1 -0,35 25,975 0,063 -0,01 -4,74 2017 (ІV) 0,8 2453,4 1,2 26,4 0,0003 0,045 0,007 2018 (І) 10 2458,8 0,5 27,25 0,004 0,018 0,22 2018 (ІІ) 50,1 2488,85 -1,2 26,9 0,020 -0,04 -0,45 2018 (ІІІ) 108,9 2568,35 1,5 27,05 0,042 0,055 0,76 Source: own development As you can see from the table. 2. calculations, in those periods when there were sharp changes in exchange rates, there is full price elasticity depending on changes in the exchange rate. Thus, it can be argued that there is a pass- through effect of changes in exchange rates to domestic prices for finished products of machine-building enterprises. However, in those periods when the exchange rate was stable and unchanged during the analyzed period, the values of the coefficients are equal to zero, which indicates that there is no reaction of prices to changes in the exchange rate. Calculations of the modified coefficient of cross-elasticity of demand, which shows the percentage changes in demand for domestic goods with a simultaneous increase in the price of imported goods due to an increase in the exchange rate, for the engineering industry of Ukraine are presented in Table. 3. Table 3. Calculations of the modified coefficient of cross-elasticity of demand for the products of engineering enterprise Year Production volume mechanical engineering, thousand pieces Price of imported products (thousand euros) The average price in the industry Volume of imported engineering products Change in the price of imports Changes in sales of domestic producers The ratio of sales of domestic products to changes in import prices The ratio of domestic prices to the volume of imports Elasticity 2008 36900,6 5958218,58 477,675 13379839,3 400000 -1191,9 -0,003 3,57 -1,063 2009 18785,7 6558218,58 533,55 6257043,8 600000 -18114,9 -0,03 8,52 -2,57 2010 30879,5 7958218,58 597,4675 8166974,9 1400000 12093,8 0,008 7,31 6,32 20
  22. 22. ISSN 2534-9228 (2021) VUZF review, 6(1) Year Production volume mechanical engineering, thousand pieces Price of imported products (thousand euros) The average price in the industry Volume of imported engineering products Change in the price of imports Changes in sales of domestic producers The ratio of sales of domestic products to changes in import prices The ratio of domestic prices to the volume of imports Elasticity 2011 3119,7 8602385,06 608,5225 12795104,9 644166,5 -27759,8 -0,04 4,75 -2,04 2012 2520,1 8658754,32 633,655 13178672,5 56369,26 -599,6 -0,01 4,80 -5,11 2013 2168,7 9096969,84 681,4725 12470050,3 438215,5 -351,4 -0,0008 5,46 -4,38 2014 1140,4 9476347 810,205 8720756,2 379377,2 -1028,3 -0,002 9,29 -2,52 2015 1561,1 10158193,2 1500,525 6273379,8 681846,3 420,7 0,0006 0,0002 1,47 2016 20,79 10517985,6 1970,222 7889365,2 359792,4 -1540,31 -0,0043 0,0002 -1,069 Source: own development The size of the exchange rate pass-through on domestic producer prices depends on many factors, the most significant of which are: - the structural organization of markets for specific goods or industries (the degree of market monopolization, product differentiation and the risks of price discrimination); - features of consumption of imported goods and the elasticity of this consumption. The higher the share of imports in production costs, the closer the estimate of the elasticity between the exchange rate and inflation; - macroeconomic features of the national economy (monetary policy regime, balance of payments structure). Within the framework of the study, an assessment was made of the influence of the dynamics of changes in the exchange rate on the change in the average price in the general engineering industry. The results of the correlation analysis of the dynamics of the change in the exchange rate for the change in the average price in the car building industry with a lag in the 1st quarter are presented in Fig. 2. As can be seen from the calculations, in the field of general mechanical engineering, there is a closer relationship between the change in the exchange rate and the price, while maintaining the seasonality factor. This is due to the fact that the Ukrainian car building industry is 80% export-oriented. Calculation of the correlation of these indicators for the car building industry with a lag in the second quarter demonstrates an insignificant smoothing of the determination coefficients while maintaining the influence of the seasonal factor. The calculations show a close relationship between the change in the exchange rate and the price of general engineering products. In addition, calculations indicate the influence of seasonality on fluctuations in the exchange rate and prices (Fig. 3). 21
  23. 23. ISSN 2534-9228 (2021) VUZF review, 6(1) Fig. 2. The dynamics of change in the coefficients of determination based on the results of correlation analysis for general mechanical engineering for the period 2007-2018. lagged I quarter Source: own development Fig. 3. The dynamics of change in the coefficients of determination based on the results of correlation analysis for general mechanical engineering for the period 2007-2018 with a lag of the II quarter Source: own development Studies of the degree of dollarization of Ukraine's economy at the macro level and at the level of the engineering industry have shown that the Ukrainian economy is influenced by a high level of dollarization. At the micro level, ie at the enterprise level, the impact of dollarization is manifested through the effect of transferring the dynamics of exchange rates to domestic prices. In the course of the research, a scientific hypothesis of the closeness of the relationship between changes in exchange rates and domestic prices for products of machine- building enterprises was put forward. To confirm the hypothesis, the autocorrelation method and the ARIMA prediction model were chosen. According to the hypothesis, we believe that the observed processes are random. In this case, it becomes impossible to use dynamic models that are based on the dependence of a variable on a 22
  24. 24. ISSN 2534-9228 (2021) VUZF review, 6(1) number of factors. For example, regression analysis extrapolation is a method of describing most time dependencies, which assume a clear functional dependence of one factor on the action of other factors. Therefore, if standard regression methods are applied to successive observations over a period of time, some problems may arise in interpreting the results. This statement fully justifies the choice of the model that was used for this research method. The effect of transferring the influence of exchange rate dynamics on the domestic prices of car-building enterprises is also confirmed by the graph in Fig. 4. Figure 4 - The effect of transferring the dynamics of exchange rates to domestic prices of car companies (source: own development) (Chukurna О., Nitsenko V.and other, 2019: 117-129) The absolute value of the transfer effect and the speed of its implementation in mechanical engineering depends on the action of many factors, among which the following should be noted: − The degree of openness of the industry to foreign markets, namely: the volume of exported products; the degree of involvement in the production of imported factors of production; degree of competition from imported products. Indeed, the products of the car-building industry have a high share of exports in the structure of total production and experience a high degree of competition. − A high share of exports in the structure of manufactured products will strengthen the national currency. However, for exporters, this situation may put pressure on the price of engineering products in foreign markets, which will help producers to limit export prices for their products. In turn, they will seek to offset costs by raising domestic prices in the Ukrainian market. Thus, the following law comes into force: the lower the share of exported products, the less domestic prices for wagon products will be subject to pressure from the exchange rate. The lower the degree of differentiation of wagon products, the more power machine- building enterprises have in setting discriminatory prices for consumers, translating their foreign exchange costs into product prices. This will indicate a high degree of monopolization of the car industry. Conclusions − The study of dollarization as a global factor has revealed the spread of dollarization in many economies, especially those in transition. The dollarization of the economy takes place against Observations Adjustment The upper boundary of the confidence interval The lower limit of the confidence interval 23
  25. 25. ISSN 2534-9228 (2021) VUZF review, 6(1) the background of the replacement by foreign currency (dollar) of all five functions of money performed by the national currency. This approach to the definition of dollarization allowed to substantiate the fundamental approach to the functions of money in the context of dollarization and the transformation of price functions depending on the functions of money when they are replaced by foreign currency. It has been proved that the law of value transforms the mutual influence of money functions and price functions. The price reflects the value of the goods in cash through the sum of the values of the factors of production and the value of the goods. In this context, part of the price functions is reflected precisely through the law of value. − In the course of the research, indicators of estimating the degree of dollarization of the economy at the macroeconomic level were formed and substantiated, the measurement and evaluation of which are interrelated with the transformation of money functions. − It was proved that at the meso- and microeconomic level the degree of dollarization of the economy occurs at the domestic prices of machine-building industries and individual enterprises due to the effect of transferring the exchange rate to the prices of machine-building products. Economic and statistical models (autocorrelation, ARIMA model) were used to prove the close relationship between them. The study substantiates the use of autocorrelation to prove the effect of the transfer of the impact of exchange rates on prices for finished products of mechanical engineering enterprises. The expediency of using the ARIMA forecasting model to predict the further spread of the effect of transferring exchange rate changes to prices for products of machine-building enterprises has been proved. When modeling the effect of the transfer of the impact of exchange rates on prices for products of machine-building enterprises, time gaps between changes in exchange rate indices and changes in domestic prices of machine-building enterprises were revealed. The main factors that determine the degree of influence on the effect of transfer of exchange rates on the prices of machine-building enterprises are substantiated, among which, the following have the greatest influence: degree of openness of the branch to foreign markets and dependence on import resources; high share of exports in the structure of manufactured products; low degree of product differentiation of machine-building enterprises; discriminatory prices for consumers. References Anischenko, A.V. (2012). World Monetary System and Dollarization of the Russian Economy. Mining Information Analytical Bulletin (Scientific-Technical Journal), 11, 172-174. Babenko V.O., Petuhova V.O., Perepelitsia A.S. (2017) Forming of informatization strategic prospects for Ukraine in conditions of world economy globalization. Scientific Bulletin of Polissia. 2 (10), 1, 24-34. DOI:10.25140/2410- 9576-2017-1-2(10)-24-34 Bannister, M. G. J., Turunen, M. J., & Gardberg, M. (2018). Dollarization and Financial Development. International Monetary Fund. Calvo G. R.C. (2002) Fear of Floating. Quarterly Journal of Economics. 117 (2), 379-408 Chukurna О., Nitsenko V., Kralia V., Sahachko Y., Morkunas M., Volkov A. Modelling and Managing the Effect of Transferring the Dynamics of Exchange Rates on Prices of Machine-Building Enterprises in Ukraine. Polish Journal of Management Studies. 2019. Vol.19, №1. р. 117-129 .URL: https://pjms.zim.pcz.pl/resources/html/artic le/details?id=190117 Delatte, A.-L., & López-Villavicencio, A. (2012). Asymmetric exchange rate pass-through: Evidence from major economies. Journal of Macroeconomics, vol. 34, issue 3, 833-844. DOI: 10.1016/j.jmacro.2012.03.003. Devereux, M., Lane P., & Xu, J. (2006). Exchange rates and monetary police in emerging 24
  26. 26. ISSN 2534-9228 (2021) VUZF review, 6(1) market economies. Economic Journal, 116 (511), 478-506. DOI: 10.1111/j.1468- 0297.2006.01089.x. Dobrynskaya, V.V. (2008). The monetary and exchange rate policy of the Central Bank of Russia under asymmetrical price rigidity. Journal of Innovations Economics, Vol.1, №1, 29-62. Goldberg, P.K., & Knetter, M.M. (1997). Goods Prices and Exchange Rates: What have we Learned. Journal of Economic Literature, XXXV, 1243–1272. Golovnin M.Y. (2004) Dollarization in the transition economies of Russia and Central and Eastern Europe. Studies on Russian Economic Development. 3, 124-135. - URL: https://econpapers.repec.org/article/scn009 162/ IMF Primary Commodity Prices. International Monetary Fund. – URL: https://www.imf.org/external/ pubs/ft/ar/2018/eng/index.htm. Michalchuk, N.A. (2016). Dedollarization policy in foreign countries. Economy and Management, 1 (45), 68-72. Ozturk, S., & Ozturk, F. (2018). Forecasting energy consumption of Turkey by Arima model. Journal of Asian Scientific Research, 8(2), 52. Pai, P. F., & Lin, C. S. (2005). A hybrid ARIMA and support vector machines model in stock price forecasting. Omega, 33(6), 497-505. Piontkovsky R.V. (2007) Dollarization, inflation volatility and underdeveloped financial markets in transition economies. Scientific report No. 03/02. - M.: EERC -32c. Semenov S.K. (2007) Money: dollarization as an inflationary factor // Finance and Credit, no. 30 (270), 47-51 State Statistics Service of Ukraine URL: http://www.ukrstat.gov.ua/ Webber A.G. (2000) Newton’s gravity law and import prices in the Asia Pasific // Japan and World Economy, 12 (1)., 71-87 World Investment Report 2018 (UNCTAD) - N.Y.; Geneva: United Nations, 2018. 46. URL: https://unctad.org/en/PublicationsLibrary/w ir2018_overview_ru.pdf. 25
  27. 27. ISSN 2534-9228 (2021) VUZF review, 6(1) An innovative approach to managing the interest margin: economic and statistical analysis of the resource base of a commercial bank Svitlana Andros* А ; Shichao Chang B A National Scientific Center «Institute of Agrarian Economics», Department of Financial and Credit and Tax Policy, 10, street Heroyiv Oborony, Kyiv 03127, Ukraine B China Zhejiang Golden Egg Technology LLC Company, Pavlo Tychyny Avenue, 1B apt. 430, Kyiv, Taras Shevchenko National University of Kyiv, Department of Enterprise Economics, 60, street Volodymyrska, Kyiv, 01033, Ukraine Received: March 05, 2021 | Revised: March 26, 2021 | Accepted: March 31, 2021 JEL Classification: C43, E41, E43, G21, G35, H21. DOI: 10.38188/2534-9228.21.6.03 Abstract The dynamics of interest income, that is, the difference between the average rates on active and passive operations of the bank, has been analyzed. It was found that the increase in the share of term deposits in the total amount of the bank's mobilized resources is positive, despite a temporary decrease in net interest income. It has been substantiated that the deposits of legal entities are a stable part of the attracted resources. The purpose of the article is to improve an innovative approach to managing the interest margin based on the economic and statistical analysis of the bank's resource base. The scheme of the bank interest income management process is proposed. The size of interest income, trends and factors of its change have been determined. The indicator of the minimum interest income was calculated on the basis of which the bank covers expenses but does not ensure profit. The level of profitability of bank loan operations has been determined. It has been established that a change in interest income can be caused by an increase or decrease in rates on active operations of the bank, interest on attracted resources and the shares of the latter in the total volume of credit investments. A mechanism for the formation of bank interest income is proposed. The possibility of reducing the spread of interest rates and placement rates in the bank through the use of the proposed funding mechanism has been scientifically substantiated. Keywords: bank, deposit, efficiency, customers, interest margin, interest rate, resources. Introduction In the context of the globalization of financial markets, the penetration of foreign capital into the Ukrainian banking system and, as a result, the growth of competition with international financial intermediaries represented by subsidiaries of transnational bank holdings, the search for optimal ways of organizing the activities of banks is of particular relevance. Transformations in the construction and functioning of the banking sector have become * Corresponding author: A Doctor of Economics, Associate Professor, e-mail: andros.sv@ukr.net, ORCID: 0000-0001-5561-901X B Director of the Ukrainian Branch Golden Egg Technology, e-mail: changshichao8888@126.com, ORCID: 0000-0003-2945-5220 the starting point for the development of the direction of "banking financial management" in economic science. But now, not all issues of financial management in the bank have been worked out by scientists deep enough, which is due to the specifics of the activities of a commercial bank as a single economic entity that systematically manages all functions of money. The path towards the formation of a 26
  28. 28. ISSN 2534-9228 (2021) VUZF review, 6(1) powerful banking sector in Ukraine increases the importance of the issues of performance management of each specific bank for the banking system as a whole. Therefore, the problem of assessing the effectiveness of a commercial bank and taking measures to improve it requires a detailed study and development of a scientific concept. Banks redistribute resources in the economy, accumulating free cash resources in their accounts (deposits) and lending them for temporary use (loans). The main goal of the bank's activities is to obtain maximum profit while ensuring stable long-term operation and a solid position in the market. The profit of a commercial bank is the financial result of the bank's activities in the form of an excess of income over expenses. Thus, the main components that form the bank's profit are interest and non-interest margins. Interest margin - the difference between interest income and bank expenses, between interests received and paid. It is the main source of the bank's profit and is designed to cover taxes, losses from speculative transactions and the so-called “cargo” – the excess of interest-free income over interest-free costs, as well as banking risks. The size of the margin can be characterized by an absolute value in national currency and by many financial indicators. Since 2018, the interest margin of Ukrainian banks began to gradually decline. Ultimately, this affects the profitability of banks and the ability of individual banks to service their obligations. This means that the business models of many banks are at risk. This applies to those banks that have not begun to build a transactional business (based on commission income and does not depend on the level of interest rates in the market), invest little in increasing non-interest income, do not have pronounced advantages; rely on expensive liabilities from individuals and legal entities. For such banks, a decrease in interest margin, loss of income from operating activities, loss of competitive positions and residual investment attractiveness are likely. Material and methods The scientific literature discusses in detail the issue of the use of transfer pricing in banking in terms of the redistribution of financial results already obtained. However, insufficient attention is paid to how to obtain this financial result and optimize the procedure for obtaining it, at what level it is necessary to set interest rates on banking products that generate net interest income. There is no scientific justification for calculating the spread, which is used in transfer pricing between rates for attracting and placing resources. An analysis of the determinants of corporate dividend policy was performed in (Ali et al., 1993; Andros, 2015). An innovative approach to ranking and regulating systemic risks with a lack of equity was proposed by scientists (Acharya et al., 2012; Marlina and Danica, 2009; Miles et al., 2013). An analysis of bank loan and deposit portfolios and interest rates was carried out by economists (Acharya et al., 2006; Barnett et al., 1992; Craig and Dinger, 2011; Rice and Örs, 2006). Non-interest income and results of bank deposit activities and financing strategies are considered in (Bokyung et al., 2019; Demirguc- Kunt and Huizinga, 2010; Diebold and Sharpe, 1990; Neumark and Sharpe, 1992; Hautsch et al., 2015). A model of reserves, bank funds and deposit insurance was proposed by scientists (Bryant, 1980; Rotemberg et al., 1991). A microanalysis of banking system stability was carried out by researchers (De Jonghe, 2010; De Young et al., 2013; Hannan and Berger, 1991). The theoretical and practical foundations of bank operating expenses were reflected in the works (Kovner et al., 2015; Lucas and Robert, 1972; Hughes and Mester, 2013). The determinants and the value of matching discretionary loan loss reserves have been studied by scientists (Morris et al., 2016). Scientific studies of foreign authors are marked by a high level of professionalism. Note that each scientific work is devoted to a specific problem and only indirectly concerns a 27
  29. 29. ISSN 2534-9228 (2021) VUZF review, 6(1) comprehensive analysis of the bank’s resource base, which forms net interest income. In addition, there is no economic and statistical analysis of the resource base of a commercial bank, due to which it is possible to really assess the effectiveness of interest margin management. Today, there is a need to develop adequate methodological and methodological methods for the use of interest. Research in the field of net interest income should be focused on the activities of commercial banks. It is necessary to equip Ukrainian banks with the new methodology and tools for managing net interest income. The new methodology and tools for managing net interest income should cover the entire technological cycle: setting the interest rate; its use in calculating interest payments; allocation of interest received and paid to expenses and income; interest income generation; obtaining a net financial result. The purpose of the article is to improve an innovative approach to managing the interest margin based on the economic and statistical analysis of the bank's resource base. Results and discussion Managers need to know what margin is (including in relative terms) to make a decision in the field of marketing. Bank interest margin is the difference between interest income and expenses of a bank, between interest received and paid. Interest margin is a profitability ratio in the banking sector that measures how efficiently a bank makes investment decisions by comparing interest income and funding costs (Ali et al., 1993). Banks get most of the profits precisely from loans. Therefore, the cheaper they get the money and the more expensive they give, the better they work. Interest margin as the main source of profit, is designed to cover taxes, bank risks, losses from speculative operations and the so-called “weight”, that is, the excess of interest-free income over interest- free costs (Hughes and Mester, 2013). It is not appropriate to compare the interest margins of different banks, since the nature of lending and deposit activity varies for each bank. Interest margin can be viewed from different perspectives. It can be borrowed money that is used to purchase securities (Marlina and Danica, 2009; Miles et al., 2013). The purchase of securitiesusingborrowed fundscarriesgreat risks, since for the potential opportunity to make big profits; you have to pay significant financial losses. At the same time, the investor faces an additional risk - interest payment for the use of borrowed funds (Acharya et al., 2006). The interest margin may be characterized by the absolute value in the national currency and other financial ratios (De Jonghe, 2010). The absolute value of margin can be calculated as the difference between the total amount of interest income and expenses of the bank (Barnett et al., 1992). The absolute value of the margin can be calculated as the difference between the interest income for certain types of active operations and the interest expenses associated with the resources used for these operations. For example, between interest payments on loans and interest expenses on loans (Bokyung et al., 2019). The interest margin indicator measures the profit that the bank generates from lending to customers and payments on deposits from total interest assets. Banks use this ratio to analyze their investment decisions and track credit returns (Morris et al., 2016). Thus, banks can adjust their lending methods to maximize interest margin margins. The dynamics of the absolute value of the interest margin is determined by the following factors: the volume of credit investments and other active operations that generate interest income; rate for active operations; rate on passive operations; the difference between the rates for active and passive operations (spread); the share of interest-free loans in the loan portfolio; share of risky active operations that generate interest income; the method of accrual and collection of interest; a system of generating income and expenses; inflation rate; the ratio between the amount of equity and 28
  30. 30. ISSN 2534-9228 (2021) VUZF review, 6(1) attracted resources; resource structure (De Jonghe, 2010). From a financial point of view, the resource management process is an activity related to the management of passive operations of a bank. It is passive operations that determine the volume, scale and direction of profitable operations, therefore passive operations play a decisive role in relation to active (De Young and Gökhan, 2013). In managing passive operations, it is necessary to regulate the amount of expenses on raising funds and the amount of income that can be obtained from investing these funds in credit operations or securities. The totality of resources received by the bank is used to carry out active operations in order to generate income. The Bank places concentrated funds in various assets (loans, securities, cash and reserves) (Craig and Dinger, 2011; Rice and Örs, 2006). At the same time, the bank should strive to manage resources as efficiently as possible. Managers should take into account not only the purely professional aspects of banking, the requirements and standards of the National Bank of Ukraine or market competition issues, but also the desire of depositors and customers, the goals of the bank's shareholders and interests (Andros, 2015). However, the goals of bank depositors and owners of its shares are sometimes incompatible. Such incompatibility appears in virtually every financial transaction of the bank and is reflected in the inevitable contradiction between the requirements of liquidity and the desired profitability of operations (Rotemberg et al., 1991). We consider this conflict between liquidity and profitability to be the key problem that the bank solves when placing funds. On the one hand, the bank's management is feeling pressure from shareholders who are interested in higher incomes (Bokyung et al., 2019). High incomes can be obtained by performing risky operations, lending to borrowers with dubious creditworthiness and reducing unused balances (Demirguc-Kunt and Huizinga, 2010). On the other hand, the bank's management understands that placing funds in more profitable investments and loans causes increased risk and seriously impairs the bank's liquidity (Andros, 2015). Thus, an understanding of the relationship between active and passive operations management is critical to maintaining bank profitability. In this regard, it is necessary to determine the optimal combination of attracted sources, based on the specifics of a particular bank, as well as to effectively manage interest rates on attracted resources (Diebold and Sharpe, 1990). Given the above, we formulate general provisions for managing interest margin. Firstly, the provision of loans is carried out at the expense of own sources, attracted funds of legal entities and individuals (Neumark and Sharpe, 1992). From the standpoint of financial security, it is not advisable to use interbank credit for lending purposes. Secondly, attracting various sources of funds into circulation, the bank must constantly compare their volumes and value with the volumes and value of loans issued, thereby managing the interest margin. Thirdly, funds of legal entities and individuals attracted by the bank are placed in loans, factoring, leasing and securities in full, without a balance (Hautsch et al., 2015). Harmonizing relationships between different parties and at the same time achieving profit targets can be helped by the liabilities distribution model (De Young et al., 2013). It allows you to streamline financial resources and form optimal directions for the transformation of passive operations into active operations. The process of managing the net yield on interest- bearing assets (interest margin) is presented in Fig. 1. 29
  31. 31. ISSN 2534-9228 (2021) VUZF review, 6(1) YIELD MANAGEMENT ON INTEREST-BEARING ASSETS Attracting financial resources Balances on current accounts (correspondent, current account, single bank account) Placement of financial resources Cash Interbank loan Required reserves Interbank loan On-demand financial resources Time deposits Savings deposits Own financial resources, profit Short-term securities, short-term loans, factoring Long-term loans, forfeiting Financial leasing Long-term securities Own funds and reserves (statutory fund, reserve fund, bank development fund Debt securities issue Fixed assets and intangible assets Precious metals Ensure ongoing payments Reliable allocation of long-term financial resources Formation of funds, assets and property of the bank Fig. 1. The process of managing interest rate yields Source. Improved by authors for [Kovner et al., 2015]. Each of the three blocks shown in Fig. 1, exists more or less autonomously. The first block provides ongoing payments. The second block allows you to reliably place long-term financial resources. The third block forms the funds, assets and property of the bank, working for the future. The advantage of the proposed approach is that it provides a distinction between the sources of attracting financial resources in accordance with the norms of required reserves, terms of attraction, the rate of turnover of funds and the potential yield on interest-bearing assets that they can bring. Indeed, own funds do not require the creation of reserves, have an unlimited nature of attraction and are able to bring maximum yield on interest-bearing assets (Bryant, 1980). Own funds do not require liquid assets and are used to invest in fixed assets (buildings, land), and the remaining funds are intended for long-term loans and less liquid securities. In other words, they are aimed at increasing the bank’s income (Marlina and Danica, 2009). Conversely, demand deposits require a high rate of required reserves compared with savings and fixed deposits. The speed of their turnover is much higher than that of other types of deposits (Neumark and Sharpe, 1992). Sometimes it reaches 25 and even 45 revolutions per year. Interbank credit is auxiliary and is not considered as a source of coverage of assets (Rotemberg et al., 1991; Hannan and Berger, 1991). Demand funds are not advisable to be placed in long-term securities and fixed assets. Demand deposits should be directed to the formation of required reserves. Demand deposits should be placed in short-term loans and in secondary reserves for investment funds in short-term government securities. Demand deposits and own funds can bring a higher yield on interest assets as compared to term and savings deposits (Miles et al., 2013; Morris et al., 2016). Thus, the process for managing interest income assets considered in Figure 2 provides a methodological basis for making decisions on the allocation of borrowed funds and reduces the excess of liquid assets, as opposed to savings and fixed-term deposits and equity. 30

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