Economics and management of national economy

Transformation of the financing patterns of agricultural enterprises in the conditions of the financial system crisis: a case of Ukraine and the USA

Economic Annals-XXI

Economic Annals-ХХI: Volume 182, Issue 3-4, Pages: 77-89

Citation information:
Oliynyk-Dunn, O., Wasilewski, M., Wasilewska, N., Okhrimenko, I., & Adamenko, V. (2020). Transformation of the financing patterns of agricultural enterprises in the conditions of the financial system crisis: a case of Ukraine and the USA. Economic Annals-XXI, 182(3-4), 77-89. doi: https://doi.org/10.21003/ea.V182-09

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Olena Oliynyk-Dunn
D.Sc. (Economics),
Professor,
Kyiv Cooperative Institute of Business and Law
18 Lomonosov Str., Kyiv, 03022, Ukraine
olenaooliynyk@gmail.com
ORCID ID: https://orcid.org/0000-0003-3047-2749

Miroslaw Wasilewski
D.Sc. (Economics),
Professor,
Warsaw University of Life Sciences (SGGW)
166 Nowoursynowska Str., Warsaw, 02787, Poland
miroslaw_wasilewski@sggw.edu.pl
ORCID ID: https://orcid.org/0000-0001-6791-5713

Natalia Wasilewska
D.Sc. (Economics),
Professor,
Jan Kochanowski University in Kielce
5 Żeromskiego Str., Kielce, 25369, Poland
nwasilewska@ujk.edu.pl
ORCID ID: https://orcid.org/0000-0001-8638-4735

Ihor Okhrimenko
D.Sc. (Economics),
Professor,
Kyiv Cooperative Institute of Business and Law
18 Lomonosov Str., Kyiv, 03022, Ukraine
i.okhrimenko@kkibp.edu.ua
ORCID ID: https://orcid.org/0000-0003-3607-870X

Viktor Adamenko
Senior Lecturer,
Kyiv National University of Trade and Economics
19 Kyoto Str., Kyiv, 02156, Ukraine
v.adamenko@knute.edu.ua
ORCID ID: https://orcid.org/0000-0002-6908-6522

Transformation of the financing patterns of agricultural enterprises in the conditions of the financial system crisis: a case of Ukraine and the USA

Abstract. The authors study how the financing patterns of agricultural enterprises have changed under the influence of the financial system crisis in Ukraine and the United States (US, USA). The indicators of financing patterns, which are traditionally employed in financial management, were used. However, the main financial indicator which is the financial leverage indicator provides distorted results because agricultural lands are not objects of sale in Ukraine, therefore, they are not considered as assets and are not reflected in the balance sheet of enterprises at fair value. The agricultural lands, which are leased by the agricultural enterprises, were evaluated and the financial leverage indicator was recalculated. After the recalculation, the financial leverage indicator was reduced from 1.081 to 0.128 in 2017 (the latest data available by the beginning of 2020 has been applied). The obtained adjusted value of the financial leverage indicator in Ukraine was even lower than the actual value of 0.149 in the USA in 2017. In addition, the integral indicator of debt capital quality was built to characterize the debt capital of the agricultural enterprises.

The analysis showed that the financial system crisis in Ukraine influenced negatively on the financing patterns of the agricultural enterprises. Ukraine lagged far behind in terms of key indicators of the financing patterns of the agricultural enterprises compared with the USA.

The study showed the significant statistical relationship between the integral indicator of debt capital quality of the agricultural enterprises and the integral indicator of the banking sector component of the financial system in Ukraine, which allowed building the reliable regression model. It means that the financial crisis influences negatively on the quality of debt capital of the agricultural enterprises. One of the main reasons for improper compensation of the negative effects of the financial system crisis on the agricultural enterprises is the absence of a specialized financial system for agriculture in Ukraine (contrary to the USA), which needs to be confirmed in the course of further research.

Keywords: Agricultural Enterprise; Debt Capital Quality; Financial System Development; Financial Leverage; Agricultural Lands; American Agriculture; Ukrainian Agriculture; Regression Model

JEL Classification: G10; G21; Q14

Acknowledgements and Funding: The authors would like to thank the participants and organizers of the International Scientific Conference «Tendencies on the agricultural land market – structural and financial effects», organized on April 20, 2018, at the Department of Finance of Faculty of Economic Sciences, Warsaw University of Life Sciences, Poland, where the premise of this paper was presented, and several valuable inputs were gained. The paper is a revised, updated and extended version of the report presented at the conference.

Contribution: The authors contributed equally to this work.

DOI: https://doi.org/10.21003/ea.V182-09

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Received 11.02.2020
Received in revised form 29.03.2020
Accepted 30.03.2020
Available online 15.04.2020
Updated version of the paper as of 30.07.2020

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