ФІНАНСОВИЙ РИНОК РЕСПУБЛІКИ БІЛОРУСЬ В УМОВАХ ЄВРАЗІЙСЬКОЇ ЕКОНОМІЧНОЇ ІНТЕГРАЦІЇ: ПРОБЛЕМИ І ПЕРСПЕКТИВИ РОЗВИТКУ

The financial market of the Republic of Belarus is traditionally considered to be quite developed in relation to states with an emerging market. However, the analysis of the main macroeconomic indicators of the national economy development and financial depth indicators indicates that the market potential is not fully realized to ensure the country's economic growth. The purpose of the research is to identify the main directions for improving the financial market of Belarus within the framework of the Eurasian economic integration. The methodological basis of the research was analytical reviews, regulatory legal acts, scientific research on the study of problems and prospects for the development of the financial market of the Republic of Belarus. The study used the methods of dialectics, formal logic and systems analysis, in particular, general logical methods of analysis, analogies, methods of description and comparison, statistical methods to assess the dynamics of the Belarussian financial market development and substantiate proposals for its improvement. The main hypothesis of the research was the assumption that improving the Belarussian financial market development will stimulate the country's economic growth and create conditions for deepening the Eurasian economic integration on the way to creating a common financial market of the Eurasian Economic Union (hereinafter – the EAEU). Presentation of the main material. The financial market of Belarus is currently operating in the conditions of Eurasian economic integration and is involved in the active process of harmonizing the national legislations of the EAEU member states to create a common financial market. The Belarusian financial market development will stimulate the country's economic growth, that’s why it’s important to achieve a sufficient level of financial depth. The paper analyzes the main indicators of the financial depth of the Belarussian financial market in 2011-2020. The main problems of the country's financial market development have been identified and a set of measures to improve it has been proposed. The originality and practical significance is confirmed by the proposed directions for improving the Belarusian financial market within the framework of the Eurasian economic integration. Conclusions and prospects for further research. The financial market of the Republic of Belarus is dynamically developing and quite sustained, however, its potential is not being fully realized. The structural imbalance of the market is manifested in the dominance of the banking sector, in which a significant part of the savings of individuals and legal entities is concentrated. It’s necessary to reduce the active participation of the state in the redistribution financial resources to close the gaps in institutional development. The implementation of the proposed set of measures to improve the Belarusian financial market in the context of the formation of a common financial market of the EAEU member states will create a stable, transparent and liquid national financial market. Further research will focus on the development of a strategy for the development of the financial market of the Republic of Belarus in the course of the formation of a common financial market of the EAEU states.

Empirical Analysis of Financial Depth and Width Based on Convolutional Neural Network

There are great differences in financial and economic development in different regions. In different time series and different regions, the effects of financial depth and width on economic development are also different. This paper selects neural network to establish the economic benefit model of financial depth and breadth, which can deeply explore the relationship between financial data and economic data. In order to determine the optimal convolutional neural network parameters, the optimal convolutional neural network parameters are determined through comparative simulation analysis. The convolutional neural network model based on the optimal parameters is applied to the empirical analysis of the effect of financial and economic development in X region. In order to obtain the optimal convolutional neural network parameters, different convolution layers, convolution core size, and convolution core number are compared and simulated. The convolutional neural network model with optimal parameters is used to simulate the financial and economic data of X region. The simulation results show that the density of financial personnel has a certain impact on economic development, so it is necessary to improve the comprehensive quality of financial personnel and promote regional economic development. Therefore, this paper seeks an effective method to study the effect of financial breadth and depth on economic development which can provide a feasible idea for the in-depth research method of financial and economic development.

Relationship between financial innovation, financial depth, and economic growth

The intrinsic property of modern economic development is financial deepening in the light of incremental spearheading financial innovation opportunities. The paper deals with the relationship between financial depth, financial innovation, and economic growth among 22 OECD economies over 2007–2018 by applying pooled OLS and fixed effect panel data regression analysis. The purpose of the paper is to empirically test whether the economic growth depends on financial depth, financial innovation, and institutional environment (Worldwide Governance Indicators). The findings shed light on the recent discussion on the pros and cons of financial innovation. The estimation results show that while financial depth is a strong predictor of economic growth across high- and upper-middle-income economies, financial innovation is a slightly weaker predictor. Despite the identified positive impact of financial innovation on economic growth, it is asserted that the negative effect of financial depth may indicate oversaturated financial market in developed countries. Сonsistent with the general notion that the institutional framework promotes the capacity of the financial sector for financial innovations implementation, this paper states that financial depth and financial innovations are better prerequisites of economic growth than institutional development. AcknowledgmentThe paper was funded as a part of the “Relationship between financial depth and economic growth in Ukraine” research project (No. 0121U110766), conducted in the State Institution “Institute for Economics and Forecasting of the NAS of Ukraine”.

Financial depth-economic growth nexus: Implications for the Ukrainian banking sector

The relevance of this study is warranted by changes in the modern understanding of the interrelation between economic growth and financial depth. While earlier studies consider it to be universally positive, newer ones tend to challenge both nature and direction of such a relationship. This paper aims to investigate the nature of the financial depth-economic growth nexus in Ukraine during 2008–2019 based on data provided by the State Statistics Committee of Ukraine and the National Bank of Ukraine, using the standard OLS regression. The resulting model with an adjusted R squared of 0,96 confirms a strong (within a 90% confidence interval) linear relationship between real GDP per capita, denominated in local currency, which was used as a proxy for economic growth, and financial depth, which was assessed using three indicators: the share of bank loans to non-financial institutions in real GDP, the share of non-bank loans to non-financial institutions in real GDP, and the share of stock market capitalization in real GDP. Both bank and non-bank loans to real GDP ratios have a negative impact on economic growth (UAH 2,154 and UAH 78,154 decline per 1% growth, respectively), while market capitalization provides a positive influence (UAH 1,641,130 growth per 1% growth). This implies that, despite concentrating the majority of the resources available to the Ukrainian financial sector, the banking sector does not contribute to its economic growth. This can be alleviated by imposing additional restrictions on the amount of government securities allowed in a bank’s capital structure. AcknowledgmentsThe paper was funded as a part of the “Relationship between financial depth and economic growth in Ukraine” research project (No. 0121U110766), conducted at the State Institution “Institute for Economics and Forecasting of the NAS of Ukraine”.

Effect of financial deepening on economic growth: Does it encourage income group transition?

The rapid growth of financial deepening raises the problem of its effect, beneficial for economic development. This paper aims to demonstrate the relationship between economic growth (GDP per capita growth, GNI per capita) and financial depth (domestic credit to private sector and credit availability) in 142 countries, split into four income groups, over 2000–2020, using correlation analysis and data from the World Bank and the IMF. Besides, a comparative analysis of domestic credit to the private sector, economic freedom, Gini index, total government expenditure and national savings of countries that increased their income group status over 2011–2020 is presented. Financial deepening (increased credit availability and expansion of domestic credit to the private sector) encourages economic growth (via GNI per capita and GDP per capita growth). Although the presence of a nonlinear relationship between economic growth (GDP per capita growth) and financial depth (domestic credit to private sector and credit availability) over 1991–2020 is insufficient, there is a linear relationship between GNI per capita and credit availability, between credit availability and domestic credit to the private sector for the same sample of countries over 2000–2020. Meanwhile, there is a tendency towards a decrease in the correlation between GNI per capita and GDP per capita growth. Given the revealed linear correlation between domestic credit to the private sector and GNI per capita, financial deepening positively impacts income growth, and this dependence strengthens with increasing income levels. Target values of domestic credit to the private sector are proposed for the income group transition. AcknowledgmentThe paper was funded as a part of the “Relationship between financial depth and economic growth in Ukraine” research project (No. 0121U110766), conducted at the State Institution “Institute for Economics and Forecasting of the NAS of Ukraine”.

Financial Development in Developing Countries and Its Impact on Economic Growth between 2008 and 2017

This article examines how the level of financial development has changed in the ten years between 2008 and 2017 in connection to the most significant events in the global economy and finance and how financial development has influenced economic growth in developing countries. The study measures financial development following the World Bank (2020) approach and using indicators of financial access, financial depth, financial efficiency and financial stability, corresponding to financial institutions and financial markets. Based on a two-way fixed effects model, we find that financial development has positively and significantly contributed to economic growth in these countries during the ten years between 2008 and 2017, through increased access of individual consumers and firms to financial products and services. Other variables such as the depth, efficiency and stability of financial institutions and markets do not correlate significantly with the economic growth of developing countries between 2008 and 2017. This paper concludes that the access to financial institutions for individuals living in developing nations is favourably and significantly connected to economic growth in these countries.

Capital Inflows and Economic Growth in Selected COMESA Member Countries

This study examines the impact of capital inflows (FDI, ODA and Remittances) on economic growth in COMESA member countries. Applying System GMM estimation, the study finds a positive and significant relationship between capital inflows (except remittances) and GDP per capita growth, supporting the positive role capital inflows play in bridging the savings and investment gap, by providing finance for investment. However, remittances do not significantly influence GDP per capital growth. Remittances contribute positively to GDP per capita growth only when interacted with a variable for domestic financial depth. Examining whether capital inflows adversely affect economic growth, the study finds that except for the remittances whose effect is not significant, capital inflows (FDI, ODA and total inflows) leads to an appreciation of the REER, that may be detrimental to growth. The parameter for remittances does not significantly effect REER, implying that remittances are in most cases used to smoothen households’ consumptions during macroeconomic shocks and hence are counter-cyclical in nature. The study recommends, among others, financial sector reforms that will ensure increased depth of the domestic financial sector, capable of harnessing and providing efficient vehicles that can direct remittances for investment. JEL classification numbers: F15, F21, F24, F35, F43, F45. Keywords: Capital inflows, Economic Growth, COMESA.

Financial Sector of Russia: 30 Years of High Volatility Inside Global Finance

The article provides a comparative analysis of the financial sector of Russia and other countries in the structure of the global economy; international comparisons are made over 30 years in terms of financial depth, including monetization, “saturation” with loans and securities, inflation, and interest rate. The inadequacy of the size of the financial sector to the size of the Russian economy is shown, the extremely high volatility of financial variables is analyzed (using the example of the exchange rate and changes in the institutional network (banks and non-bank financial institutions)). The model of the financial sector is revealed (excessive role of the state, overconcentration in the markets and among financial institutions, oligopolization, “monetary desertification” of regions, excessive administrative costs, focus on capital export). Shown is the “pro-crisis” nature of the financial sector in Russia (1– 2 crises in 10–15 years). The complete correspondence of the parameters of the financial sector of Russia to other developing economies is demonstrated (the fourth – seventh dozen countries in terms of financial depth). It is shown that the parameters of financial development, as a rule, are worse than the groups of countries with lower middle income (according to the international classification). The analysis of the Russian economic model made it possible to show the cause-and-effect relationships between it and the financial sector model, their interdependence. Four scenarios of the economic future (“besieged fortress”, “frozen economy”, “Spanish”, “growth economy”) are given, with estimates of their probability, and on this basis the corresponding scenarios for the future development of the Russian financial sector. The scenario of the “growth economy” based on the change in the model of the economy in Russia, the policy of “financial afterburner” and the formation of a new model of the financial sector in Russia is more fully disclosed.