ALTERNATIVE FINANCING FOR ENTERPRISE DEVELOPMENT: THE CASE OF UKRAINE

Olga SYCH, Iryna PASINOVYCH

Abstract


Introduction. Enterprises at different stages of their operation and development life cycle need appropriate financial support. The article describes the alternative forms of financing, focusing on the mezzanine financing instruments (source of financing).

Purpose. It aims to identify, characterize, and evaluate mezzanine financing instruments in comparison to the debt and equity financing sources.

Results. Mezzanine financing represents an innovated form of financing, that is new and less popular in Ukraine. The problems of Ukrainian financial market are underlined. The article specifies the criteria of evaluation of different sources of financing including classic and innovative forms.  It shows strength and weaknesses of each financing source in Ukrainian condition. The T. Saati Method is used to form the matrix of the advantages of different sources of financing. This evaluation was performed on the basis of 7 criteria.

Originality. A systematic analysis using the Saati hierarchy method showed, that the most important criterion for choosing a source of financing for Ukrainian enterprises is independence in management and decision-making in the enterprise, other factors influencing the choice of financing are the size and price of the financial source.

Considering a small business, that seeks to scale its business and innovate, the attractiveness of the types of financing was assessed on the basis of selected criteria. The analysis shows that traditional loan is much more popular, then other sources, but it also indicated the advantages of mezzanine financing in comparison to the other types of financing.

Conclusions. Enterprise needs adequate financial support, the forms of which are currently quite diversified. Alternative sources of financing could be direct investment funds, government bonds for emigrants, that gives countries access to their migrants' funds and uses them for economic development.

Among the alternative forms of financing the development of enterprises is mezzanine financing which is widespread in international activities but is practically not used in Ukraine.

Ukrainian financial market can implement mezzanine activities on the basis of European experience through the creation of specialized financial institutions. This important step requires legislative changes, that are necessary to implement mezzanine financing and other alternative forms of financing of the enterprises.


Keywords


corporate financing sources, mezzanine, equity, debt, Ukrainian financial market

References


Kovalev, V. (2000). Introduction into financial management. Moscow. Finance and Statistics. 768 p. (in Russ).

Danylyshyn, B. (2019). Independence of the NBU is the independence of politics, not individuals. Dzerkalo tyzhnya. Mirror of the week. November 1. Available at: https://dt.ua/ macrolevel/nezalezhnist-nbu-ce-nezalezhnist-politiki-a-ne-okremih-osib-za-fasadom-nezalezhnosti-instituciyi-328192_.html (in Ukr).

Korneeva, Yu. (2018). Adaptation of mezzanine financing to the needs of state-owned enterprises. Business Inform. № 4. P. 337-343. (in Ukr).

Lyuta, O. (2013). Mezzanine capital as a source of financing of innovative development of the enterprise. Innovative development of economy: processes and phenomena: [monograph]. Dnipropetrovsk. NMU. P. 353–361. (in Ukr).

Mykolyshyn, M. (2012). Mezzanine financing as a hybrid source of raising capital by the bank Bulletin of the National University of Water Management and Environmental Sciences 4 (60). P. 144-152. (in Ukr).

Tetrevova, L.& Svedik, J. (2018). Mezzanine financing instruments in comparison to the classic financing sources. Business, Management and Education. Volume 16 Issue 1. P.133–146.

Saati, T. (2004). Decision making. Method of analysis of hierarchies. Moscow. 278 p. (in Russ).

OECD (2019). Global Outlook on Financing for Sustainable Development 2019. Time to face the challenge. Available at: https://www.oecd.org/dac/financing-sustainable-development/development-finance-topics/Global-Outlook-on-Financing-for-SD-2019.pdf

Khromayev, T. (2019). National commission that regulate the financial market in Ukraine. Available at: https://dt.ua/ECONOMICS/nkcpfr-oprilyudnila-pokazniki-fondovogo-rinku-ukrayini-za-2018-rik-302795_.html. (in Ukr).

Gaidutsky, A. (2019). Strategy for the return of Ukrainians. Dzerkalo tyzhnya. Mirror of the week. December 26, 2019 Available at: https://zn.ua/ukr/social_secutity/strategiya-povernennya-ukrayinciv-334072_.html (in Ukr).

Fälligkeit Standard-Mezzanin (2011). Herausgegeben von PWC AG, 2011. Available at: http://www.pwc. de/de_ DE/de/finanzierung/assets/PwC-MezzaninStudie_2011.pdf.

European Commission (2007). Mezzanine Finance. Roundtable between bankers and SMEs. Final Report. Available at: http://www.pedz.uni-mannheim.de/ daten/edz-h/gdb/07/roundtable_ securitisation _ 2007.pdf

EMPEA (2014). Private Credit Solutions Mezzanine Financing in Emerging Markets. Available at: https://www.empea.org/app/uploads/2017/10/EMPEA_Emerging-Markets-Mezzanine-Report_May-2014_WEB.pdf

Law of Ukraine (2014). On Joint Investment Institutions. Available at: https://zakon.rada.gov.ua/laws/main/index (in Ukr).

Mirabile, M. (2014). Using financial instruments to mobilize private investment for development. Cooperation Report 2014: Mobilizing Resources for Sustainable Development. OECD. Paris. Part II, Chapter 11. P. 135-144. Available at: http://www.oecd-ilibrary.org/docserver/download/4314031ec015.

Vasilescu, L (2007) Mezzanine Finance: Closing the Gap Between Debt and Equity. Available at: http://steconomiceuoradea.ro/anale/volume/2007/v2-finances-accounting-and-banks/149.pdf

Vasillescu, L. (2009) Mezzanine debt: benefits or drawbacks for firm’s financing? Revista Tinerilor Economisti (The Young Economists Journal). Vol. 1 (12). P. 14 – 20.


Full Text: PDF

Refbacks

  • There are currently no refbacks.
Archive
2015 4 12   24 33  
2016 1 2   3 4  
2017 1 2 (V.1) 2 (V.2) 3 4 (V.1) 4 (V.2)
2018 1 2   3 4  
2019 1 2   3 4  
2020 1 2   3 4  
2021            

User

Information

Journal Content

Browse

Language