The financial system of Ukraine in comparison with other world countries
THE MINISTRY OF SCIENCE AND EDUCATION OF YOUTH AND SPORT OF UKRAINE
SUMY STATE UNIVERSITY
Faculty of Economics and Management
Chair of Finances
INDIVIDUAL TASK ON DISCIPLINE
“FINANCES”
on theme
“The financial system of Ukraine in comparison with other world countries”
Variant 1
Number of student’s book 10040040
Student
Supervisor
Sumy
2012
TABLE OF CONTENTS
INTRODUCTION..................
1. Finance system of Ukraine……………………………………………………...
1.1. The functioning of finance ………………………………………………...6.
1.2. The structure of the financial system of Ukraine ………………………….6.
1.3. The financial market and its components ………………………………….8.
1.4. The major financial institutions ……………………………………………9.
2. Financial system of Russian …………………………………………………..10.
2.1. The functioning of finance ……………………………………………….11.
2.2. The structure of the financial system of Russian ………………………...12.
2.3. The financial market and its components ………………………………..15.
2.4. The major financial institutions ………………………………………….16.
3. Practical part ………………………………………………………………….18.
CONCLUTIONS…………………………………………………
REFERENCES……………………………………………………
Introduction
With the proclamation of the political and economic independence of Ukraine
the question of the creation of the national financial and credit system. Case in
the fact that the financial and credit system, which functioned in Ukraine
at that time, expressed the economic relations of the former Soviet political
and economic systems, and their headquarters were in the borders of the Ukrainian state.
It was impossible to implement neither political, nor economic transformation,
ensure that the national political and economic sovereignty without forming and development of national financial, monetary and credit system.
Marxists, see under financial policy in the first place the totality of public Relevance of research topic. Reliable the financial system is the linchpin in the development and successful the functioning of a market economy and a necessary prerequisite for the growth and the stability of the economy as a whole. This system is the basis of mobilizing and distributing savings of the company and helps it everyday the operation. Therefore, although the structural shift from mainly centrally planned and controlled economy to an economy
functioning in accordance with market principles, includes many of the elements, the most important is to create a reliable financial system. After you have a strong financial system, can develop markets money and capital, especially primary and secondary markets of national government securities.
Elaboration extent of the problem. In recent years the issues of creating
sound financial system and in the state financial policy is dedicated to a significant number of publications. However, the unity of the on the theoretical aspects of this issue has not been reached.
So, the Western large economists did not give a clear definition of
financial policy. WITH. Fischer, R. Dornbusch do not allocate
financial policy as an independent concept. At the same time they suited to the study of this topic, by expanding the definition of fiscal policy. Similarly, consider this problem and some other representatives of the foreign economic schools. In particular To. R.McConnell and WITH. L. BRU combine the concepts of financial-budgetary and fiscal policies, defining them as amendments introduced by the government in order public spending and taxation, aimed at ensuring
full employment and is not inflationary national product. Actions on stabilization of financial resources, their distribution and the use for the state's implementation of its functions, pointing out that social orientation and effectiveness of the impact of the financial policy the development of the productive forces and the relations of production are determined by the objective regularities of the economic development, socio-political system of the country. Goals and objectives of the work. The aim of the research is revealing the essence and
the structure of the modern financial system in a market economy and trends
of its development. First you need to decide on what criteria we will compare the two countries: the Ukraine and Russia. First of all we shall compare on the basis of the structure of the financial system, as it is known in different countries it is different, after compare the financial market and all its components, then the functioning of Finance and the last shall compare the major financial institutions.
1. The financial system of Ukraine
The most important element of the economic mechanism of modern society
are Finance. Finances - the system prevailing in the society of economic relations on the formation and use of funds of funds on the basis of distribution and redistribution of the total social product and national income.
Finance is a historical category. They arose in the conditions of inventories
cash relations under the influence of the development of functions and needs
of the state. The term "Finance" comes from the Latin. "finansia", which means
income payment. In the meaning of "cash payment" he began to be used in
XII-XV centuries in Italy, a number of cities which - Florence, Venice, Genoa, were at that time the largest European centers of trade and banking. In hereinafter, the term has gained international spread and became be used as a concept connected with the system of financial relations, the formation of money resources mobilized by the state to perform their political and economic functions.
In pre-capitalist formations of government revenues had mainly natural character. The majority of needs the state was satisfied at the expense of various kinds of revenue from natural charges. With the decadence of the feudal system and the development of his the depths of capitalist relations become increasingly important money incomes and expenditures of the state. This process is enhanced with expansion of commodity-money relations, grow and become more complex functions of the state. With a Department of the state Treasury of personal cash and ownership of the monarch arise concept of "public Finance" and "state budget".
In modern conditions the notion of Finance covers, on the one hand, public Finance, on the other - the finances of the enterprises and corporations. Public Finance is a special sphere of economic relations, associated with the secondary, as well as a primary distribution and consumption part of gross social product in order to form cash the funds required the state to exercise its functions. Their material content is embodied in the national and local budgets, special funds, finances of state-owned enterprises. Private Finance enterprise and corporate Express money relations, which arise in the course of their economic activity and provide the production process and reception of profit. They materialized in the form of money capital, the various cash funds of the enterprises.
1.1 The Functioning of Finance
Finance function through the financial system, which includes a combination of different forms of organization of financial relations between the state and enterprises, between enterprises, organizations and their associations, the relations of the state with the enterprises and organizations with the population. The most important instruments of this system are taxes, payments to the budget, payments for public loans, rental payments, forming of the budgetary and non-budgetary funds and their use for the satisfaction of social needs, etc. An important element of the financial system is the Ministry of Finance of Ukraine and its bodies on the ground. It is the beginning of forming and use of the main economic regulators and is responsible for the complete responsibility.
1.2. The structure of the financial system
The financial system of Ukraine is rather complex and multi-layered structure. Components of the three-tier system of Finance are: Finance primary structural links of the economy, the finances of the enterprises and organizations; public Finance; the finances of the population. Graphically this scheme is shown in Fig. 1.
Specified in the scheme of the components of the financial system in further consideration include the Finance sectors of the economy, the finances of state-owned enterprises, co-operative, joint-stock, private enterprises and other enterprises.
The main principles of the construction of the three-tier system of Finance were:
a) full economic independence of the Finance of the enterprises and their isolation from public Finance;
b) independence and separateness of the state budget from extra-budgetary funds, including social insurance Fund, pension and other;
c) self-financing of all economic entities;
d) the formation of independent base of local and regional budgets;
e) the right to conduct independent financial policies for all economic entities;
f) development and implementation of business plans of each of the participants of the financial and economic activities. Realization of these and other principles would help Finance take their right place in the entire economic system, maintain the turnover and the circulation of funds, improve the efficiency of production, productivity and quality of products.
The financial system of Ukraine was and still is not free from such negative features of the totalitarian state, as excessive centralization, a single form, planning from the top, division of the state financial and material resources for the decision of problems of the state, society and enterprises. Because of inflation falling living standards of the majority population and it still remains in fact withdrawn from the system of Finance.
1.3. The financial market and its components
Under the conditions of a market economy to provide a properly functioning mechanism of movement of cash flows of resources from the population, which mainly carries out the savings to investments, which are being implemented enterprises, can only be clearly functioning financial market. He is depicted schematically in Fig. 2.
None of the components of the financial market may not be an instrument of market economy, as they are interrelated and mutually intertwined. But also have their own specifics. The state should well consider the specific character and use of such mechanisms of the regulation of each of these institutions: the banking market, securities market and insurance market to improve the economic situation of all subjects of economic life and raise the efficiency of social production. Although the financial market in Ukraine is only nascent its main operating elements are already working. For example, a national banking system, work has begun the primary securities market, the beginning of the insurance market, which is constantly gaining momentum. The main subjects of the financial market is issuers, investors and financial intermediaries.
Developed financial market consists of a variety of channels, which can be summarized in the form of two groups:
a) the channels of direct financing, for which means of moving directly from the owners of savings to borrowers through the sale of shares, bonds and other securities;
b) the channels of indirect financing, for which the cash flows from the owner of the savings to the borrower are channeled through financial intermediaries (banks, insurance companies and other credit and savings institutions). The task of financial intermediaries is the direction of the savings from those, who earns more than it spends, to those who spend more than they earn. In this process the most important functions are performed by the banks, so as they purposefully regulate the cash flows from the owners of savings to investors.
1.4. The major financial institutions
It is known the statement that "every link of the financial system represents a certain sphere of financial relations, and the financial system as a whole, the totality of the various spheres of financial relations in the process of which are formed and used funds of funds."
By analogy with generalizing concept of the subjects of the stock market «investment Institute" - introduce the concept of "financial institution ".
Financial institution, or any one of the subjects of financial relations, which is the subsystem (or element) of the financial system, in the implementation of the relevant functions of the financial system. On the set of "financial institutions" can be installed hierarchy, corresponding to the hierarchy: state - local Finance - finances of the enterprises. However, when establishing a hierarchy can be used and other approaches, for example, the urgency, the importance of the subject to the decision of problems.
It should be noted that the financial system of the country is one of the fast developing undergoing reform. The names of the most important elements of the financial system of the country and their powers fairly often change.
At the present time, there is some overlap of powers and tasks of financial institutions that can be and is the source of role conflicts in the financial system. For example, there are discussions on the distribution of functions and areas of responsibility for the accreditation of experts and licensing of legal persons in terms of their work on the securities market, etc. And therefore, the functions of the elements are redistributed in accordance with the present stage of development of the financial markets and the new tasks of reforming the economy. It would be useful to further redistribution of functions of elements of the financial system and, considering the objectives of financial goal-setting, marketing, management.
Distribution of functions between the financial institutions of higher level of the hierarchy of modern Ukraine.
The distribution of functions between the financial institutions of higher level of the hierarchy of modern Ukraine can be the following:
- The administration of the President of Ukraine - goal setting financial policy: the construction of the'tree of financial goals" for the territories and branches, definition of permissible and possible sources of financial resources; development of Decrees and legislative initiatives in the area of Finance;
- The Verkhovna Rada of Ukraine - marketing and coordination of financial tools of the state, development and the adoption of laws, the approval of the budget;
- The Ministry of Finance of Ukraine - financial management. It consists of offices, with their own specific subfunction. So budget office is the project of the Federal budget. In addition it includes sectoral management of national economy (defense and defense industry, construction and construction industry, transport systems and communications, environmental protection, agriculture and processing industry, etc.); control and audit Department, etc.
- Treasury of Ukraine - provides cash execution of the budget;
- The national Bank of Ukraine - provides macroeconomic regulation of money circulation, than the impact on the state of the financial system, is an agent of the Government of Ukraine on placement of internal debt, regulates the activities of commercial banks on financial markets;
- The tax Inspectorate ensures the accuracy and control of collection of taxes.
2. Russia's financial system
In connection with this financial system is a combination of different areas (parts of) the financial relations, each of which is characterized by peculiarities in the formation and use of funds of funds, the different role of the public reproduction.
The financial system of the RUSSIAN Federation includes the following parts of the financial relations: state budget, non-budget funds, state credit, insurance, finances of enterprises of various forms of ownership. All of the above financial relations can be divided into two subsystems. This national Finance, ensuring the needs of the extended reproduction of the macro, and the finances of economic entities used to ensure the reproduction process in cash at the micro level.
The distinction of the financial system in some parts due to differences in the objectives of each level, as well as in methods of formation and use of centralized and decentralized funds of funds. National centralized funds of money resources are created by the distribution and redistribution of national income generated in branches of material production.
The important role played by the state in the field of economic and social development, leads to the need for the centralization at its disposal a large part of the financial resources. Forms of their use are budgetary and extra-budgetary funds for the needs of the state in solving economic, political and social tasks. Other forms and methods of formation and use of monetary funds shall apply credit and insurance parts of the financial system.
The interconnection and interdependence of the constituent parts of the financial system are caused by single entity Finance. Through the financial system of the state affects the formation of centralized and decentralized funds, funds of accumulation and consumption, using for this tax, expenditures of the state budget, state loan.
2.1. The functioning of Finance.
The state budget is the main financial plan of the country, approved by the Federal Assembly of the RUSSIAN Federation as a law. The financial system - the aggregate of organizations, providing money turnover in the framework of a certain country include:
- state financial subsystem, which provides the receipt of monetary funds to the budget and their use;
- banking subsystem, which includes financial institutions, providing settlements, loans, investments, transactions with cash;
- the subsystem of the circulation of state securities, which serves to attract funds on the secondary securities markets.
The state manages the company and consists of a number of structures: the political, economic, social, religious, etc.
The interconnection and interdependence of the constituent parts of the financial system are caused by single entity Finance.
Through the financial system of the state affects the formation of centralized and decentralized funds, funds of accumulation and consumption, using for this tax, expenditures of the state budget, state loan.
2.2. The structure of the financial system of Russia.
The financial system of any country consists of several interrelated elements (institutions) and bodies. The existence of various institutions within the financial system is explained by the fact, that the finances serve the diverse needs of the society, cover their impact the economy of the country and the whole sphere of social activities in General. Proceeding from this, under the financial system of the Russian Federation should be understood:
a) the aggregate of financial institutions, each of which contributes to the formation and use of appropriate monetary funds;
b) the sum of public authorities and institutions, carrying out within its competence, financial activities.
The totality of financial institutions, regulating the creation, redistribution, and use of funds of funds, constitutes a financial system, which reflects the development of the state in conditions of transition to the market .
So, in particular, financial the system of the Russian Federation consists of the following funds of funds and corresponding legal institutions:
1) the Budgetary system, consisting of the Federal budget, budgets of the subjects of the Federation and the budgets of local self-government bodies.
2) State non-budgetary funds (regulation of which is devoted directly to Chapter 17 of the BC RF. Thus, according to article. 144 BC, state non-budgetary funds of the Russian Federation are as follows: Pension Fund of the Russian Federation; the social insurance Fund of the Russian Federation; the Federal Fund of compulsory medical insurance; the State employment Fund of the Russian Federation).
3) insurance Funds.
4) State loan.
5) Finance economic entities (ресурсовые funds).
6) the Stock market.
V.P. Litovchenko considering the structure of the financial system of the RUSSIAN Federation, which is based on the principle of separation of Finance on the national and decentralized. The basic parts of the financial system of the RUSSIAN Federation are presented in figure.
The basis of the national Finance are the budgets of corresponding levels. To the national Finance also includes the state social non-budget funds, credit of the state.
The national Finance play a leading role in the regulation of economic processes and distribution relations at the macro level. National Finance accumulate in the hands of the state and local self-government bodies, their formation and distribution have centralized nature.
Finance credit and banking system, insurance, enterprise finances to a greater extent regulate economic processes at the micro level. But at the same time we cannot say that these are the links of the financial system serving only the level of economic entities (in the broadest sense), because there is a close interrelationship and interdependence of all elements of the financial system.
Through the financial system of the state, by adopting appropriate laws, regulations, acts on formation of the centralized and decentralized financial resources, using for this purpose financial instruments: taxes, the credit system, the mechanism of pricing, etc.
National Finance organically linked with other elements of the financial system.
Thus, the interconnection and interdependence of the constituent parts of the financial system due to their single entity.
The role that the state plays in the socio-economic development of society, identified a need for centralization at its disposal a large part of the financial resources.
State loan reflects the credit relations in the mobilization of the state of the temporarily free funds of enterprises, organizations and population on the basis of repayment, interest payment and the urgency to Finance government spending. Lenders are individuals and legal entities, the borrower is the state in the person of its Executive bodies. State loan will be used for covering the budget deficit, stabilizing the money circulation in the country.
Mobilization of financial resources creates a large state debt. Distinguish the state internal debt and external debt.
2.3. The Russian financial market.
The role of the financial market lies in the fact that it mobilizes temporarily free capital from diverse sources; effectively distributes the accumulated free capital between many end its consumers; identifies the most effective ways of use of capital in the investment sphere; a market price for certain financial instruments and services, objectively reflecting the evolving relationship between supply and demand; has a qualified intermediary between the seller and the buyer of financial instruments; creates conditions for minimization of the financial and commercial risk; accelerate capital turnover, i.e., contributes to the activation of economic processes.
Financial markets perform a number of important functions:
1. Provide the interaction of buyers and sellers of financial assets, as a result, which sets prices for financial assets that balance the demand and supply on them.
In the financial market of each of the investors has certain views on the profitability and risk profile of their future investments in financial assets. At that, of course, they considered the current financial market situation: minimum interest rates and interest rate levels, which respond to different levels of risk. Issuers of financial assets, in order to be competitive in the financial market, seek to provide investors the required level of profitability of their investments.
2. Financial markets introduce the mechanism of the repayment from investors adequate financial assets and thus increase the liquidity of these assets. Buy from investors financial assets provide financial intermediaries -- dealers market, which at any moment, if it is necessary to investors, stand ready to buy financial assets that they own. The more effective functioning of the financial market, the higher the liquidity it provides financial assets, which are in circulation on it, because any investor can quickly and practically without losses at any moment to turn financial assets for cash. Financial intermediaries are always ready to not only purchase financial assets and sell them to investors in case of need.
3. Financial markets provide assistance to find for any of the creditors (borrowers) of the counterparty agreement, as well as to significantly lower the cost of transactions and information costs. Financial intermediaries, carrying out large volumes of transactions on investment and attraction of funds, reduce for the participants of the market costs and the corresponding risks of carrying out of operations with financial assets. As the market for shares and bonds, and the credit market that is intermediaries play a crucial role in the movement of capital. Particularly noticeable role in financing intermediaries corporations, which have not the highest credit rating and the amount of which is significant in all countries of the world.
Financial intermediaries reduce costs through economies of scale of operations and improvement of procedures of estimation of securities, issuers and borrowers in the credit market. In the countries with developed market economies operate highly efficient financial markets, which provide a mechanism for redistribution of financial resources among the participants of the market and promote the efficient allocation of savings among the areas of the economy. The development of financial markets in such countries provide assistance to mass privatisation, the overcoming of the crisis phenomena and positive shifts in the economy.
2.4. The financial institutions.
Financial institutions are financial institutions and all the structural subdivisions of the State tax service of the RUSSIAN Federation.
To financial institutions include: banks, non-banking credit organizations, insurance companies, private pension funds, leasing companies, etc.
Most of these institutions act as financial intermediaries.
A financial intermediary is an economic entity, which accumulates the funds of citizens and economic entities, multiplies these funds at the expense of profit (revenue) of the activity and the effectiveness of their mobilization in material production.
The content of the activity of financial institutions
A Bank is a credit organization, which has the exclusive right to carry out in all of the following operations:
- attraction of monetary funds of citizens and economic entities to deposits;
- placement of these funds on its own behalf and for its own account on terms of repayment, interest payment and urgency;
- opening and maintaining accounts of citizens and economic entities.
The Bank aims to increase temporarily the free money resources, to provide loans, to conduct transactions with securities, mutual payments and settlements between legal entities and citizens.
In the RUSSIAN Federation operates a 2-tier banking system: the Central Bank of the RUSSIAN Federation; commercial banks.
Non - Bank credit institution has the right to perform certain banking operations for the extraction of profit as the basic purpose of their activity (for example cash settlement centers of the Central Bank of the RUSSIAN Federation).
The exchange is an organized and regular functioning market for the purchase and sale of goods, securities and other assets.
Trades exchange-traded assets are performed in a specially equipped room and specially trained personnel.
Exchange performs functions of:
* mobilization temporarily of free money resources by sharing them to exchange goods;
* establish the market price of the financial assets.
The exchange is created in the form of non-commercial partnership (not to extract profits from its stock market activity). It organizes trade between members of the exchange. Other persons may make transactions on the stock exchange only through the exchange members.
3. Practical part
Conclusions
The formation of a financial system of Ukraine took place simultaneously with the formation of its statehood. Although it would be premature to say that this sector of the economy has gained a complete image of the main elements of one way or another have been formed and are functioning. This is the system of state finances, banking, stock and currency exchanges, insurance companies, trust and investment companies. History of economic development and Finance shows that in periods of relative prosperity and sustainable development of the state for the revival of business activity using the liberal approach, and in the periods of crises and growth of the social tension is intensifying the role of the state, public Finance in the social and economic transformations.
The RUSSIAN economy, like the financial system, accordingly, is not yet 10 years. And it is quite obvious that to form a stable and well-developed financial system in such a short period of time is impossible. But we should not forget that Russia has always developed on a particular original way, and, therefore, in the conditions of a rapid transition to a market economy was able to quickly adapt.
For the past period of time was formed the backbone of the financial system, on the basis of which is the development of its separate elements. In the framework of each of them requires detailed elaboration of the mechanisms of functioning, the regulatory framework, systems of communications. All of this is happening in recent years by reforming, development of new legislative acts, introduction of modern technologies.
In the modern world financial system is becoming a global mechanism. Therefore, it must develop not only inside the country as an isolated system, but also as an integral element of the global financial machine.
As stated above, one of the priority directions of development of the financial system is the formation of a financial center. This is a very important task, because in its absence, Russia will have to play according to the rules. "That is, become part of the financial system of the European Union or the Asian financial system, and not integrated into the world system as a separate component.
For the solution of internal tasks of development, it is necessary to have a stable internal mechanism. First of all it concerns the budgetary system. By the stability and effectiveness of the functioning of which determines the financing of all the other projects. For this according to the development strategy, which reads the President's annual budget address, it is necessary to develop and stabilize the mechanisms of filling of the Treasury and mechanisms for the allocation of funds.
At the end of work clearly shows that in the financial systems of both countries have much in common, especially in the financial structure. But do not forget that these countries contiguous and they have more or less friendly relations. That is why they have so much compatibility in the financial system.
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