Pavlo Kerimov

The relevance of this study is warranted by changes in the modern understanding of the interrelation between economic growth and financial depth. While earlier studies consider it to be universally positive, newer ones tend to challenge both nature and direction of such a relationship. This paper aims to investigate the nature of the financial depth-economic growth nexus in Ukraine during 2008–2019 based on data provided by the State Statistics Committee of Ukraine and the National Bank of Ukraine, using the standard OLS regression. The resulting model with an adjusted R squared of 0,96 confirms a strong (within a 90% confidence interval) linear relationship between real GDP per capita, denominated in local currency, which was used as a proxy for economic growth, and financial depth, which was assessed using three indicators: the share of bank loans to non-financial institutions in real GDP, the share of non-bank loans to non-financial institutions in real GDP, and the share of stock market capitalization in real GDP. Both bank and non-bank loans to real GDP ratios have a negative impact on economic growth (UAH 2,154 and UAH 78,154 decline per 1% growth, respectively), while market capitalization provides a positive influence (UAH 1,641,130 growth per 1% growth). This implies that, despite concentrating the majority of the resources available to the Ukrainian financial sector, the banking sector does not contribute to its economic growth. This can be alleviated by imposing additional restrictions on the amount of government securities allowed in a bank’s capital structure.

Acknowledgments
The paper was funded as a part of the “Relationship between financial depth and economic growth in Ukraine” research project (No. 0121U110766), conducted at the State Institution “Institute for Economics and Forecasting of the NAS of Ukraine”.

The impact of social transfers on income inequality and poverty remains a subject of debate, particularly regarding threshold effects, design, and integration with taxation and labor market dynamics. Using a linear regression model, the study analyzes the dependency of the Gini index on the percentage of social transfers in the average household’s monthly resources, the percentage of households with income below the median, and the percentage of the employed populace in Ukraine from 2010 to 2021. The results show that a 1% increase in social transfers in household income reduces income inequality by 0.13%, a 1% increase in employment decreases income inequality by 0.1%, whereas a 1% rise in poverty leads to a 0.34% increase in income inequality. In line with the results from EU and OECD countries, this study confirms that increasing the share of social transfers in household incomes contributes to the mitigation of income inequality in Ukraine. However, this remains valid only if the share of social transfers in households’ total income rises proportionally. The income and expenditure patterns of Ukrainian households, along with the Gini index, reflect poverty, which is partially mitigated by social transfers; however, their effectiveness is constrained by offsetting inflation. The rise in household incomes without a corresponding reduction in poverty suggests that employment is no longer the predominant factor in poverty alleviation in Ukraine.

Acknowledgment
This paper is funded as part of the project “Financial tools for reducing economic inequality in Ukraine” research project (No. 0124U002254), conducted at the State Organization “Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine”.