Category: Financial System

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A Super State Bank: PrivatBank Has Been Nationalised. What Comes Next?

The market share of state-owned banks has been constantly growing since 2014 when a so-called banking sector cleanup started. After PrivatBank was nationalised, the government’s share exceeded 50%. How should we view this, what will it result in, and what can the state actually do about PrivatBank? Mykhaylo Demkiv, a financial analyst at the ICU, sums up the situation.

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Ukraine: Time to sever IMF’s lifeline?

Ukraine’s improving economic situation creates a feeling of no urgency in further IMF financing. This view is not justified if one looks at the three-year horizon. Ukraine faces $14bn of external debt payments over the next three years, with half of them in 2019 – a year of presidential and parliamentary elections. Foreign currency reserves that the country has accumulated have to be built up further, rather than spent. Otherwise, Ukraine’s economy may appear on the brink of another economic crisis right before the election year, which may have a dramatic effect on the country’s development trajectory post-2019.

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Minimum Wage and Tax Evasion

The Ukrainian government considers doubling the minimum wage in 2017. This policy step is aimed to resolve several issues but perhaps the most important one is to stimulate firms and workers to disclose their incomes. Will this policy work?

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The Minimum Wage: The Past of the Noble Idea and its Uncertain Present

Ukrainian Prime Minister Volodymyr Groysman surprised everyone with an initiative to double the minimum wage – up to 3200 UAH – in 2017. It is quite difficult to assess this decision because the minimum wage in Ukraine influences numerous indicators and sectors of the economy. It would be irresponsible to make any conclusions without detailed calculations. The views of modern economists on the idea of minimum wage range from enthusiastic approval to sharp criticism. VoxUkraine has studied the history of the concept of the minimum wage.

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The Circulation of US Dollars and the Black Market in Foreign Exchange in Ukraine

The Ukrainian economy is highly dollarized, which complicates the monetary policy and decreases the amount of resources available for investment. In 2014-2015, due to the inflation spike and the devaluation of hryvnia, the demand for foreign currency was bound to increase. However, according to the official data, Ukrainians decreased the foreign currency purchases by 15-20 times. It shows that foreign exchange transactions have mostly shifted to a “blind spot” for the regulator and official statistics. This happened due to the rapid development of black market after the National Bank of Ukraine introduced severe foreign exchange controls. We have tried to assess the size of the black market in foreign exchange in Ukraine and to determine to what extent Ukrainians use foreign currency. Full text is available in Ukrainian and Russian.

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Who Is Driving Reforms in Ukraine

Since the Revolution of Dignity, the President’s Office, the National Bank of Ukraine, the Parliament, and the various administrative bodies have begun a wide-ranging program of reform. Which governmental actions have proven to be good for Ukraine’s economy, and which have taken Ukraine in the wrong direction? Tetyana Tyshchuk and Oleksiy Hrybanovsky closely studied the Index for Monitoring Reforms in order to find out which government agencies are true to their word.

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Invisible Сonnection: Who Owns the Banking System of Ukraine

There is a continuing struggle between those who are striving to hide money and assets and those who are trying to find them. Central banks are one of the key players in the fight against money laundering (anti-money laundering), against the concealment of “gray” transactions (related-party lending), and against the concealment of property rights (ultimate beneficial ownership). These are the non-trivial tasks which require a comprehensive analysis. In this article, we provide a detailed analysis of the entire network of owners of Ukrainian banks. Full text is available in Ukrainian and Russian.

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Multimarket Competition and Performance: Do Ukrainian Banks Really Compete

Over the past decades, with the development of the banking systems, the ways that banks compete has changed dramatically. Nowadays, banks compete not only through price but also through geographic presence. That is, banks diversify their branches in different markets to raise the awareness of customers about the banks and services. As the number of geographically diversified banks has increased, the number of markets in which banks coincide has also increased.