The pur­po­se of the study is to ex­plo­re the evo­lu­ti­on of fi­nan­cing avail­able to Ukrai­ni­an firms in the pe­ri­od 2010 to 2016. The authors in­ves­ti­ga­te whe­ther the in­sti­tu­tio­nal en­vi­ron­ment in­flu­en­ces fi­nan­cing in Ukrai­ne, ex­ami­ning in par­ti­cu­lar the fi­nan­cial sys­tem‘s level of de­ve­lo­p­ment. The star­ting point is the no­ti­on that in coun­tries with a weak fi­nan­cial sys­tem, firms ob­tain less ex­ter­nal fi­nan­cing and this in turn de­crea­ses their op­por­tu­nities for growth. The authors argue that un­der­stan­ding how exact­ly fi­nan­cing of firms de­pends on the in­sti­tu­tio­nal en­vi­ron­ment is im­portant in de­fi­ning ef­fi­ci­ent go­vernment po­li­ci­es.

Ac­cording to this paper, Ukrai­ne is a coun­try with a po­or­ly de­ve­lo­ped fi­nan­cial sys­tem. Fi­nan­cial in­sti­tu­ti­ons (fi­nan­cial in­ter­me­di­a­ries and fi­nan­cial mar­kets) do not play the same role as in de­ve­lo­ped coun­tries with ef­fi­ci­ent fi­nan­cial sys­tems. After a slight re­co­very in 2014, the level of de­ve­lo­p­ment of Ukrai­ne's fi­nan­cial sys­tem ra­pidly de­cli­ned in 2015 and 2016. In ad­di­ti­on, there were si­gni­fi­cant trans­for­ma­tio­nal chan­ges in the fi­nan­cial sys­tem of Ukrai­ne. For examp­le, (1) mas­si­ve bank­rupt­cy of Ukrai­ni­an com­mer­cial banks, (2) rapid re­duc­tion of Ukrai­ni­an is­su­ers of se­cu­ri­ties and shor­ten­ing of tra­ding vo­lu­mes on the do­mestic stock mar­ket, (3) a si­gni­fi­cant de­crea­se in bank branch of­fices th­roug­hout the coun­try and (4) a rapid de­crea­se in stock mar­ket ca­pi­ta­liza­ti­on.

The authors use time se­ries ana­ly­sis, cor­re­la­ti­on and re­gres­si­on ana­ly­sis to as­sess the im­pact of fi­nan­cial sys­tem de­ve­lo­p­ment on a firm’s fi­nan­cing in Ukrai­ne. They de­mons­tra­te how the mi­li­ta­ry con­flict in Ukrai­ne, the deva­lua­ti­on of the na­tio­nal cur­ren­cy and the loss of Rus­si­an mar­kets since 2014 ne­ga­tive­ly in­flu­en­ced the de­ve­lo­p­ment of the ban­king sec­tor and fi­nan­cial mar­kets. Their re­sults re­ve­al that fi­nan­cing pat­terns of firms in Ukrai­ne do not show a strong sta­tis­ti­cal de­pen­dence on the de­ve­lo­p­ment of the fi­nan­cial sys­tem. Fi­nan­cing for Ukrai­ni­an firms is not pro­vi­ded by the for­mal fi­nan­cial sys­tem but by sources of in­for­mal fi­nan­cing. This re­sult sup­ports pre­vious stu­dies, sho­wing that in­for­mal fi­nan­ce is more si­gni­fi­cant in coun­tries with po­or­ly func­tio­n­ing fi­nan­cial sys­tems or weak pro­per­ty rights pro­tec­tion.

For fur­ther in­sights into this re­se­arch, plea­se visit the vir­tu­al do­main of the jour­nal at https://www.tand­fon­line.com/toc/wjeb20/26/1?nav=to­cList