Efficient use of the insurance sector potential adjusted for its shadowing: Case of Ukraine

Melnyk, Mariana; Zhabynets, O. Y.; Myshchyshyn, Ivanna; Orlov, Volodymyr

doi:10.21511/ins.12(1).2021.02

Cited by 8 publications

(5 citation statements)

References 18 publications

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“…2) the risk of realization of shadow operations by the subjects of the insurance market. Today, insurance transactions are a fairly common tool for shadowing income (Hepfer et al, 2016;Melnyk et al, 2021). Shadow market participants have developed a wide range of tools for concealing income with the help of insurance companies.…”

Section: Legalization Of Illegally Obtained Income Changing Signs Of Cash Flowsmentioning

confidence: 99%

Role Of Financial Intermediaries in Shadow Schemes: Risk-Based Approach

Tiutiunyk¹,

Humenna²

2021

FMIR

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The article is devoted to the study of the role of financial intermediaries in the shadow sector of the economy. The main purpose of the article is to analyze and systematize the work of scientists to assess the risk of shadow transactions with the participation of financial intermediaries. The results of the analysis of scientific publications on these issues show a wide variety of approaches to the study of these problems. Significant differences in the functioning of the financial, banking, insurance and investment markets of different countries have led to the need to develop and implement their own methodologies for assessing the risk of participation of financial intermediaries in shadow transactions at the state level. The paper summarizes the methodological approaches to assessing the risk of participation of financial intermediaries in shadow transactions in some countries. The methodological tools of the analysis are the methods of analysis and synthesis, generalization and comparative analysis. The object of the study are insurance companies, banking institutions and investment funds – participants in shadow schemes of income concealment. The article summarizes the most typical schemes of income concealment in terms of individual groups of financial intermediaries. The conclusion about the dual nature of banking institutions in these operations is made: 1) banking institutions as a ‘buffer’, and sometimes a direct participant on the way to the legalization of shadow income; 2) banking institutions as a subject of primary financial monitoring and control. Insurance operations that are subject to enhanced control by regulatory authorities include: pseudo-insurance operations; concluding an insurance contract with subsequent receipt of compensation for the occurrence of a fictitious insured event; concluding an insurance contract with an inflated insurance value of the object. Based on the analysis of transactions with signs of fictitiousness, which are realized on the investment market of Ukraine, the conclusion about the important role of technical securities in operations on shadowing of incomes and their further legalization is made. The results of the study can be useful for public financial monitoring and control bodies in terms of identifying transactions that could potentially pose a threat to the formal sector of the economy and developing measures to prevent them.

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Section: Legalization Of Illegally Obtained Income Changing Signs Of Cash Flowsmentioning

confidence: 99%

Role Of Financial Intermediaries in Shadow Schemes: Risk-Based Approach

Tiutiunyk¹,

Humenna²

2021

FMIR

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“…So, if in 2013, in the structure of assets of all financial intermediaries, the assets of commercial banks amounted to more than 80%, and the share of assets of investment funds exceeded 1%, then during the last 5 years the processes of disintermediation were observed in the global financial market, that is, a decrease in the share of bank assets and an increase in assets non-bank financial intermediaries. This led to an increase in the share of investment funds (by 25% on average), an increase in the assets of joint investment institutions and mostly venture funds, and therefore to their more active use in shadow schemes for concealing income (Bukhtiarova et al, 2022;Prabhu, 2021;Melnyk et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

Foreign direct investment and shadow economy: One-way effect or multiple-way causality?

Tiutiunyk¹,

Cieśliński²,

Zolkover³

et al. 2022

Journal of International Studies

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The article examines the relationship between the size of the shadow economy and indicators of the investment market development. Net inflow of foreign direct investments, volume of net investments in non-financial assets, volumes of portfolio investments, and net outflow of foreign direct investment were used as parameters characterizing the development of the investment market. The dependence between the indicators was analyzed using the regression equation, Shapiro-Wilk test. Research results demonstrate that the increase in the inflow and outflow of foreign direct investments leads to an increase in the size of the shadow economy without a time lag in Ukraine, Poland, Slovenia, Romania, Croatia, Lithuania, Latvia, Estonia, and with a time lag of 1 year in Slovakia and Hungary. The largest impact on the size of the shadow economy is made by the volume of inflow and outflow of direct foreign investments, while the volume of portfolio investments has a less significant effect. Consequently, it was concluded that the processes of inflow and outflow of direct foreign investments require enhanced control by specialized state executive bodies given the scale of their potential destabilizing impact on the macroeconomic stability of the country.

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“…In Ukraine it is impossible to ensure the effective development of entrepreneurship and a sufficient level of employment due to the high level of shadow business in the labor market (Melnyk et al, 2021a). In Ukraine, even in the insurance sector, the level of shadowing (provision of tax optimization services for business; use of internal incoming reinsurance to reduce tax liabilities; withdrawal of funds outside Ukraine or cash transfer using technical securities) is very high and increases every year (Melnyk et al, 2021b). The situation is no better in the banking sector, which is used for money laundering (Bukhtiarova et al, 2020).…”

Section: Introductionmentioning

confidence: 99%

The nexus between unemployment and the shadow economy in Lithuanian regions during the COVID-19 pandemic

Remeikienė¹,

Gasparėnienė²

2021

Journal of International Studies

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Under the current extreme conditions, with an increasing number of the unemployed, the size of the shadow economy is also growing. The competitiveness of municipalities depends to a large extent on their ability to manage unemployment and reduce the size of the shadow economy. A strategy selected for improving the municipal economy significantly affects the establishment and development of business. The article aims to assess the extent to which the unemployed are involved in the informal activities in Lithuanian regions during the COVID-19 pandemic. The research is based on the method of a representative quantitative survey. The research has revealed that the main critical issues are hiding income, work in the shadow labour market and "envelope" wages, while the major areas of shadow activities cover healthcare services, hairdressing and childcare. The research has also disclosed that the unemployed not only participate in the shadow labour market, but also justify income hiding and consumption of smuggled goods. The measures recommended for reducing the number of the unemployed are raising the average wage, exempting business start-ups from taxes for several years, and reducing the unemployment and other social benefits with consideration of one's health condition.

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Efficient use of the insurance sector potential adjusted for its shadowing: Case of Ukraine

Cited by 8 publications

References 18 publications

Role Of Financial Intermediaries in Shadow Schemes: Risk-Based Approach

Role Of Financial Intermediaries in Shadow Schemes: Risk-Based Approach

Foreign direct investment and shadow economy: One-way effect or multiple-way causality?

The nexus between unemployment and the shadow economy in Lithuanian regions during the COVID-19 pandemic

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