THE STRUCTURE AND FUNCTIONING OF UKRAINE'S FINANCIAL MARKET: A THEORETICAL ANALYSIS

Abstract

Introduction. Amid the escalation of the armed conflict in Ukraine, the financial market is experiencing significant disruptive effects, manifested in the instability of the hryvnia exchange rate, a decline in confidence in the financial system, and difficulties in long-term planning. The intensification of financial risks is accompanied by an outflow of investment capital, a decline in the value of securities, and a deterioration of the investment climate. Under such conditions, economic agents tend to limit investment activity, preferring to preserve assets in more stable forms. As a result, the stable functioning of the financial market becomes of key importance as a necessary prerequisite for the development of the real sector of the economy and the effective reallocation of financial resources.

The purpose of this article is to study and systematize theoretical approaches to defining the essence of the financial market, as well as to conduct a comprehensive analysis of the mechanism of its functioning under the conditions of Ukraine’s wartime economy.

Methods. The article employs a combination of quantitative and qualitative research methods, including the analysis and synthesis of scientific approaches to defining the essence of the financial market, a structural-functional analysis of its segments, an assessment of the impact of macroeconomic factors on its functioning, as well as a cause-and-effect analysis of currency regulation processes and investment activity; in addition, a systematic approach was used to study the mechanism of the financial market’s functioning under the conditions of a wartime economy.

Results. This article substantiates the theoretical foundations of the financial market’s functioning and summarizes approaches to defining its essence in the context of a wartime economy. In particular, the concept of the financial market is clarified as a multifunctional system for the redistribution of financial resources, which ensures not only investment processes but also the maintenance of liquidity, the coverage of cash gaps, and the management of financial risks. It is demonstrated that, under conditions of macroeconomic instability, state regulatory mechanisms specifically monetary policy instruments, exchange rate controls, and banking supervision play a key role in ensuring the market’s effective functioning. The specific features of the functioning of the main segments of the financial market (money, foreign exchange, credit, and stock) and their interrelationship in the process of ensuring financial stability have been identified. The impact of the exchange rate, interest rates, and foreign economic activity on the development of the financial market is substantiated, which allows for a comprehensive assessment of its condition and the identification of directions for improving its operational efficiency under a wartime economy.

Conclusions. The financial market is a complex, multi-level system that facilitates the redistribution of financial resources among economic agents and performs key functions within the state’s financial system. Its effective functioning is a prerequisite for economic development. The mechanism of the financial market’s functioning encompasses the interaction of various segments and instruments, as well as a system of state regulation aimed at ensuring stability. In a wartime economy, the importance of monetary policy, currency regulation, and banking supervision increases.

Prospects for further research involve an in-depth analysis of the functioning of Ukraine’s financial market under wartime and post-war economic conditions, particularly assessing the impact of macroeconomic instability on market participants’ behavior, exchange rate dynamics, and investment processes. Empirical studies using statistical data, as well as modeling the effectiveness of state financial market regulation instruments, are of particular relevance.