A RETROSPECTIVE ANALYSIS OF THE FINANCIAL SYSTEM DEVELOPMENT IN EUROPEAN TRANSITION ECONOMIES
The article is devoted to financial system development in transition economies. Much attention is given to the theoretical aspect of the financial system development impact on economic growth in transition economies. Author emphasized that developed financial markets can accelerate capital accumulation, which contributes to economic growth. Widespread use of financial market mechanisms, especially stock markets, intensifies investment activities, attracts domestic and foreign investments through financial market instruments, and allows implementing a comprehensive approach for sustainable economic development. In order to make a comparative analysis of the level of financial development in European transition economies, the banking sector, institutional investors and stock market were analyzed. Although, financial depth in transition economies is improving over the last decade, still in the majority of transition economies banking sector is the main source of financial resources, while stock market is underdeveloped and illiquid. Therefore, one of the key tasks of the current stage of financial reforms is to improve the transformation of savings into investment mechanism through the stock market. In our opinion, the development of institutional investors will have a beneficial effect on local stock markets, as this will increase liquidity, and provide long term investment for the economy. In countries with insufficiently stock markets, often institutional investors become majority shareholders and take an active part in corporate governance. In Ukraine and other potential candidates for the EU joining, the prospects for future integration with European Union should contribute to financial development. EU accession will strengthen the link between stock market development and economic growth through changes in the legislation on the securities market, banks and non-banking institutions, clearing and settlement system.
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Keywords: transition economies, economic growth, financial system, stock market, banking sector, financial intermediaries, european integration |
THEORY
Seliutina Alvina
Senior lecturer of Finance Department Kyiv National Economic University named after Vadym Hetman
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