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Section 13. Economics and management
2. Balode I., Paiders Y. «Economic Geography of the Nordic countries.» («Экономическая география государств Северной Европы») - Riga, - 2009.
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6. The development strategy of maritime activities of the Russian Federation until 2030, Orders of the Russian Federation State #2205-P as of 08.12.2010.
Kats Svetlana Valerievna, Taras Shevchenko National University of Kyiv, Ph.D student, Faculty of Economics E-mail: [email protected]
Nature of the basic financial derivatives
Abstract: the article reveals the essence of basic derivatives. Studied by various authors approaches to defining derivatives and their definitions in the legislation and proposed his own definition of the most appropriate for use in accounting practice.
Keywords: derivative financial instruments, derivatives, forward and futures contracts, options and swaps.
Derivative financial instruments (derivatives) got its name from the English term “derivative” — “original.” In French “derivatif” — output, Latin — “derivare” — aside, hold. The name was a derivative of the fact that its value is
derived from the value of the underlying instrument underlying the transaction.
In the scientific literature when considering the nature of derivatives suggest the following concepts (tab.1).
Table 1. - The definition of “derivatives” by various authors
Author Definition
Butynets F. F. Financial derivatives — financial instruments on which payments will be made in the future; whose value is affected by changes in interest rates, equity prices, foreign exchange rate, index of prices, credit rating (index) or other variables that are basic; does not require an initial investment [1].
Zawadzki Y. S., Osovska G. V., Juszkiewicz O. O. Derivative financial instruments and derivatives — a tool, mechanism of release and turnover are related to the sale of certain financial or tangible assets. Prices of derivative financial instruments are set depending on the price of assets that are placed in their base are called the underlying asset. Underlying asset can be securities, interest rates, stock indexes, commodity resources, precious metals, foreign currency, etc. [2].
Zahorodniy A. G., Voznyuk G. L., Smovzhenko T. S. Derivative financial instruments and derivatives are the original contracts to qualifying transactions with financial or real assets (stocks, bonds, exchange commodity, precious metals, currencies, etc.) on the terms specified in those contracts. The main purpose derivatives — to insure against possible losses in the stock market game, and provide safeguards against inflation and economic instability. The main types of derivatives are the options and futures [3].
Habyuk A. A. Derivatives — financial contracts, or financial instrument whose value is derived from the price of something else (the base). The basis of such financial instruments can be active (eg, raw materials, stocks, residential mortgage, real estate, bonds, loans), indexes (such as interest rates, exchange rates, stock indices, consumer price index), or others (such as weather conditions). Credit derivatives are derived from loans, bonds or other forms of credit [4].
Pavlov V. I., Pylypenko I. I., Kryvov’yazyuk I. V. Derivatives — a tool, mechanism of release and turnover are related to the sale of certain financial or tangible assets [5].
Note: Systematized by the author based sources [1; 2; 3; 4; 5]
Despite the fact that the authors interpret the term «derivatives» from different points of view, one can not deny any of the definitions. However, it is inappropriate approach to the definition of derivatives (derivatives) because most
derivatives. You can not define a particular category via the same category.
According to the researcher O. Smolyanskoyi, a feature of derivative financial instruments (derivatives) is that their
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Nature of the basic financial derivatives
investment returns depends on the financial instruments from which they come, that their treatment is related to the circulation of the underlying financial assets. The basic tool in these financial contracts can be as certain types of primary financial instruments — cash in local and foreign currencies, securities, financial indices as indices, rates, interest rates —
and most derivatives. The subject of the original contract may be not only financial instruments, but also commodities [6].
Depending on the scope of financial instruments can be distinguished legal scholars and financial approaches to the interpretation of the term «derivatives» that are related to each other (Fig. 1).
Fig.1. Approaches to the interpretation of the concept of “Derivatives” ( Developed by the author based sources [7])
Table 2. - The definition of “derivatives” regulatory framework Ukraine
Author Definition
NSA #13 “Financial instruments” Derivative financial instruments referred to are those who belong to a specific financial instrument, indicator or commodity, in which the financial market can make transactions of sale of specific financial risks (such as interest rate and currency risks, the risk of changes in stock prices and commodity prices, credit risk, etc.) regardless of the underlying instrument. Value of derivatives is derived from the price of the base obj ect, which may for example be an asset. In this case there is no transfer of principal, which would have to be repaid, and no investment income accrues. Derivatives are used for various purposes, including for risk management, hedging (insurance against possible fall of prices), arbitrage between markets, and speculation [10]
National Bank of Ukraine Derivative financial instruments (derivative financial instruments (derivatives) — financial contracts or financial instruments derived from (based on) other financial instrument (s), called the underlying instrument. The basis of this financial instrument (contract) can be active (eg, products shares, residential mortgage, real estate, bonds, loans), indexes (interest rates, exchange rates, stock indices, consumer price indices) or other conditions. Credit derivatives are derived from loans, bonds or other forms of credit [11]
State Statistics Committee of Ukraine Derivative financial instruments referred to are those who belong to a specific financial instrument, indicator or commodity, in which the financial market can make transactions of sale of specific financial risks (such as proc tnyy and currency risks, the risk of changes in stock prices and commodity prices, credit risk, etc.) regardless of the underlying instrument. Value of derivatives is derived from the price of the base obj ect, which may for example be an asset. In this case there is no transfer of principal, which would have to be repaid, and no investment income accrues. Derivatives are used for various purposes, including for risk management, hedging (insurance against possible fall of prices), arbitrage between markets, and speculation [11]
Tax Code of Ukraine Derivatives — standard document certifying the right and/or obligation to purchase or sell securities in the future, tangible or intangible assets, and funds for such conditions. Standard (default) form of derivatives and order their release and circulation established by law [12]
The Law of Ukraine “On Securities and Stock Market” Derivative financial instruments — securities, fixed-term contracts (futures) Interest-term contracts (forwards), fixed-term contracts on the exchange (at a future date) if the price depending on the interest rate, foreign exchange rate or index of securities (interest, exchange or index swaps), options giving the right to buy or sell any of these financial instruments, including those involving cash form of payment (exchange and interest options) [8]
Note: Systematized by the author based sources [10; 11; 12; 8]
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Section 13. Economics and management
The term “derivative” as much as the law was enshrined in the Law of Ukraine “On Enterprise Profit Tax”, which today is in force defines a derivative as a “standard document certifying the right and/or obligation to purchase or sell securities, or MATERIAL intangible assets, as well as funds for such conditions in the future. “ This definition of derivative financial instruments is provided in the current Tax Code of Ukraine [8].
The above regulations do not take into account the legal nature of the derivative instruments that they define, and therefore categorized as derivatives with nature-term agreements, the terms attributed to derivatives. Derivative securities — securities issuance and circulation mechanism which is connected with the right to buy or sell within the time specified by the agreement (contract), securities and other financial and/or commodity resources [9].
The definition of “derivatives” Ukraine regulatory framework shown in Table 2.
Thus, if the law of the country not defined clearly the difference between the derivatives and derivatives, these terms can be used interchangeably. This feature is also inherent in our regulations. A derivative of securities is one of the varieties of its own derivatives, so do not allocate them a distinct category of «derivatives». This will strengthen the already vague concepts and categorical apparatus.
Attempts to overcome these shortcomings were made of Parliament Ukraine adopted in different Bill, which is more detailed and carefully define the different categories of derivative instruments, such as the draft Law of Ukraine «On time exchange contracts» and the draft Law of Ukraine «On the derivatives of securities» [13]. These bills are quite progressive in terms of legal definition of derivatives, but at the same time differ, sometimes directly contradict each other.
The most accurate definition of «derivative financial instruments» is given to (Standard) 13 «Financial Instruments» of the Ministry of Finance of Ukraine, is a tool by which payments will be made in the future; whose value changes due to changes in interest rates, equity prices, foreign exchange rate, index of prices, credit rating (index) or other variables that are basic; does not require an initial investment « [10]. Defined in the said Regulations of the Ministry of Finance, is one that reflects the diverse nature of derivatives or derivatives, i now have the most accurate and faithful with all regulatory definitions
given in the Ukrainian legislation on derivatives. Moreover, given NSA are the determination of all components of the concept of «derivative financial instruments» that reflects the exact and detailed regulation of these instruments.
The bases of the class of derivatives are futures, forwards, swaps and option agreements. Since they are all connected with the implementation of specific actions within a specified period of time or at some point in the future, they are called futures contracts. Term contracts are determined by their specifications — legal documents, which is caused by the amount of the underlying asset in a contract period of performance, currency calculation method of execution (delivery of an asset or cash payments) and other characteristics.
The use of fixed-term contracts enables market participants to reduce the risk of future operations on purchase and sale of assets in the market, and reducing the potential gains or losses on such transactions. In this case, the seller of a certain type of product is secured by means of a term contract of a possible drop in prices for this product at the moment when he will need to sell and the buyer of products — from a possible rise in prices at the time of purchase of the product on the market. As a result of the conclusion of such an agreement, while there are two obligations: the obligations of the seller and buyer obligations, which are both relevant property rights.
Greater development of the market short-term agreements entered into at the international and domestic financial markets developed. And markets fixed-term contracts are more developed markets with more volatile prices and interest rates. Increased variability in interest rates do not need to identify with inflation or deflation process. At sufficiently moving interest rates in different market participants have different predictions about future developments that allows them to enter into a large number of transactions opposite nature. The development of the inflation process generates the same expectations and forecasts in different market participants that do not promote the conclusion of fixed-term contracts.
The integration of the financial market of Ukraine in the global financial system involves the use of new financial instruments in national practice, is characterized by great diversity and complexity of financial instruments, but studies the nature and significance of financial instruments enables the participant Finance market to get a high return for low investment.
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Theoretical bases of the analysis of competition in the banking sector of the Russian economy
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Minligareeva Svetlana Alexandrovna, Kazan Federal University, Undergraduate, Department of Banking E-mail: [email protected]
Theoretical bases of the analysis of competition in the banking sector of the Russian economy
Abstract: The article considers the methods of evaluation of competitive ability of banks applied in Russia. A universal method of evaluation of bank competition is proposed.
Keywords: banking sector, competition, methods of competition evaluation, Russian market of bank services.
At the modern stage of activity and development of credit organizations, there are numerous methods of evaluation of a bank’s competition; however, there is no unified method of competition evaluation in the banking sector of Russia.
The issues of evaluation of competitive positions of a commercial bank and market competition on the real bank market of Russia are not of abstract but absolutely pragmatic interest, because a correct and grounded analysis enables to position a bank on the Russian market of bank services appropriately, monitor the bank’s positions on the market, define competitors, forecast the prospects of development of a regional chain, evaluate market positions of the clients and make effective managerial decisions.
The applicable methods of evaluation of the competitive ability of banks can be combined into two generalized approaches [1, 40]:
- indirect approach — when a conclusion about market competition is made on the basis of the result of an analysis of integral market concentration;
- direct approach — when same conclusion is based on the information about cumulative market share of its leading participants (nucleus of the market).
The disadvantage of the first approach lies in the fact that market competition is interpreted as antipode of market concentration, i. e. the more (less) the inequality of distribution or concentration of market shares is, the lower (higher) the level of competition is. The use of the given methods for
evaluation of the competitive positions of a commercial bank without regard to real structure of the market leads to conclusions that depend on the selection of concentration rate.
The disadvantage of the second approach is the presupposition that the acceptable consideration of the real structure of the market is achieved by undirected (intuitional) selection of the number of leading market participants (more often it is 3, 4, 6, 8, 10, 12, 50, 100) and assessment of the importance of their cumulative market share — market power.
Currently, there are a lot of methods of analysis of bank competition on the market of bank services that are successfully applied in the Russian conditions. Most of them are based on the closed difficult-to-access information, which significantly complicates the process of analysis.
One of the methods enabling to analyze the financial condition of a bank is the method developed by a group of experts headed by V. S. Kromonov. It allows defining the current rate of reliability of banks on the basis of calculation of six coefficients:
К1 — general coefficient of reliability;
К2 — coefficient of instant liquidity;
К3 — cross-coefficient;
К4 — general coefficient of liquidity;
К5 — coefficient of capital protection;
К6 — coefficient of fund capitalization of profits.
All coefficients are designed in the way that the bigger they are, the better. According to the method, the optimally
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