Potential of institutional investors and stock market development as an alternative to households’ savings allocation in banks

Economic Annals-ХХI: Volume 146, Issue 11-12, Pages: 65-68

Citation information:
Leonov, S., Frolov, S., & Plastun, V. (2014). Potential of institutional investors and stock market development as an alternative to households’ savings allocation in banks. Economic Annals-XXI, 11-12, 65-68. https://ea21journal.world/index.php/ea-v146-16/

Sergiy Leonov
D.Sc. (Economics),
Professor,
Ukrainian Academy of Banking of the National Bank of Ukraine
57 Petropavlivska Str., Sumy, 40030, Ukraine
SVL76@mail.ru

Sergiy Frolov
D.Sc. (Economics),
Professor,
Ukrainian Academy of Banking of the National Bank of Ukraine
57 Petropavlivska Str., Sumy, 40030, Ukraine
Sfrolov@i.ua

Viacheslav Plastun
PhD (Economics),
Associate Professor,
Ukrainian Academy of Banking of the National Bank of Ukraine
57 Petropavlivska Str., Sumy, 40030, Ukraine
plastun.v@gmail.com

Potential of institutional investors and stock market development as an alternative to households’ savings allocation in banks

Abstract. In the article, the main alternatives to allocation of savings of households outside the banking system of Ukraine have been investigated. The main emphasis is made on the institutional investors and the potential growth of their assets, subject to the overflow of household savings from the banking system, as well as contributions of the individuals’ income. Evidence shows multiple assets growths of mutual funds, private pension funds, and life insurance companies.

The authors have formulated a list of factors that will contribute to such an overflow of funds. Among them are the following: the overall level of economic stability in the country, the level of individuals’ income, their willingness to make long-term investments, dissemination of public information about the scope and methods of savings allocation.

Given the fact that a substantial portion of institutional investors’ assets is traditionally invested in capital market instruments, the importance of further development of such financial intermediaries is emphasized in this paper. The authors have proposed a linear multiple regression model which shows a direct dependence of the Ukrainian stock market trading volume from changes in GDP and gross public debt, as well as an inverse dependence from changes in the consumer price index, gross savings, and deposit rates.

Keywords: Bank; Deposit; Stock Market; Institutional Investors; Mutual Funds; Private Pension Funds; Life Insurance Companies; GDP

JEL Classification: C25; G10; G20

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Received 02.10.2014