FINANCIAL MECHANISMS FOR STRENGTHENING THE STABILITY OF BUSINESS ENTITIES IN UKRAINE: A PUBLIC ADMINISTRATION PERSPECTIVE

Abstract

The article substantiates the role of financial mechanisms in strengthening the stability of business entities in Ukraine. Stability is considered as the ability of business entities to continue their operational activities at the shock absorption stage. Accordingly, an analysis of the activities of enterprises in Ukraine was conducted according to the logic of «net revenue – operating expenses – profitability – autonomy». The results of the analysis showed that the recovery of the scale of enterprises’ activities is not accompanied by a recovery in their efficiency, although a positive level of profitability is maintained. A decline in profitability may indicate a limited financial stability buffer of enterprises amid the uncertain duration of the war, instability, and a growing economic recession. The analysis of the share of equity in assets confirmed the significance of external sources of financing in ensuring the activities of enterprises even under stable conditions. The results of the analysis confirm the high demand of business entities for external resources at two stages: shock absorption, when external support is important for maintaining operational activities even when they are loss-making or have minimal profitability; and long-term functioning and recovery, when diversification of sources of external financing is important for continuing activities and development. Based on the experience and results of applying financial mechanisms of public policy in the field of strengthening the stability of business entities in Ukraine, the main directions of their development are proposed. In particular, the following mechanisms require enhanced application: strategic and medium-term financial planning, planning of priority public investments; reduction of war-related risks for production and logistics facilities through compensation of insurance premiums and expenses related to the relocation of enterprises; state portfolio guarantees for loans; promotion of financial technologies; legal regulation of crowdfunding in accordance with EU standards; and digitalization of financial support and monitoring of its effectiveness.