Baltic Journal of Economic Studies

Vol. 9 No. 2, 2023

This is an Open Access article, distributed under the terms
of the Creative Commons Attribution CC BY 4.0

1 Donetsk State University of Internal Affairs, Kropyvnytskyi, Ukraine (corresponding author)
E-mail: kuzyanna@ukr.net
ORCID: https://orcid.org/0000-0003-3957-7387
2 Donetsk State University of Internal Affairs, Kropyvnytskyi, Ukraine
E-mail: Serg_bychin@ukr.net
ORCID: https://orcid.org/0000-0002-2895-1217
3 Donetsk State University of Internal Affairs, Kropyvnytskyi, Ukraine
E-mail: iryna_ozerna@ukr.net
ORCID: https://orcid.org/0000-0002-6106-3860

DOI: https://doi.org/10.30525/2256-0742/2023-9-2-65-72

THE DEFINITION AND STRUCTURE OF FINANCIAL SECURITY
Hanna Buha1, Serhii Bychin2, Iryna Ozerna3

Abstract. The purpose of the article is to clarify the definition and structure of financial security. The subject
of the research is the definition and structure of financial security. Financial security is defined as the most
important element of the country's economic security in modern conditions; approaches to the definition of
the concept of economic security are characterized; the concept of financial security is defined; administrative
and legal relations in the field of financial security are characterized; the structure of administrative relations
in the field of financial security is determined; threats to financial security are identified; threats to the
development of the insurance market are identified; problems of the market of non-banking financial services in
Ukraine are characterized; factors ensuring the competitiveness of the non-banking financial sector in modern
conditions are characterized. Methodology. General scientific methods of formal logic (analysis, synthesis,
deduction, induction, analogy, abstraction and modeling) are used in the article. Results. Thus, the financial
security of Ukraine should be understood as a complex, dynamic, social system with an extensive network
of interconnected and interdependent elements and connections, which guarantees the state's ability to
effectively form, preserve against depreciation and rational use of financial resources and is aimed at stabilizing
the socio-economic development of the country, ensuring its stability, as well as the formation of prerequisites
for preserving the integrity and unity of the state financial system, maintenance of financial obligations.

Key words: financial security, economic security, elements of financial security, insurance market, threats to
financial security.

JEL Classification: F52, H55

1. Introduction
Modern complex state-building period in Ukraine

is caused by a combination of political, economic,
legal, social and other phenomena and processes of
external and internal origin, creating new threats and
risks to the national economy, its material basis for
systematic and full functioning of public institutions.
In the conditions of the Ukrainian people's choice
of a Pro European vector of development and other
measures aimed at the comprehensive reorientation
of state policy in accordance with new values and
ideals, there is an objectively urgent need to ensure
the proper organization and functioning of the
domestic economic security system. This is especially
relevant in the current period of economic
destabilization and the negative consequences of
many globalization processes (the global economic
crisis, a decrease in economic activity due to
quarantine restrictions, the loss of parts of the Donetsk

and Luhansk regions of Ukraine, the occupation
of the Autonomous Republic of Crimea and
Sevastopol, etc.), which inevitably leads to the
transformation of the economic system, changes in
the geo-economic situation of the country, weakening
of the existing positions in various branches of this
sphere, decline of the national economy and
impoverishment of the population. In view of its
real importance, and even from the position of real
significant influence on most European integration
measures, achieving positive results in this direction
is justified as one of the main tasks of the democratic,
social and legal Ukrainian state (Melnyk, 2021).

It should also be emphasized that in the current
conditions of development of economic integration
of the world economy the process of international
circulation of capital acquires gigantic scales,
exerting a noticeable influence on the state and
further development of the economy of any state.

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Vol. 9 No. 2, 2023
However, their withdrawal from Ukraine has become
permanent, which has a destructive effect on the
development of the domestic economy and poses
a real threat to economic security. The result of this
process is the reduction of investment resources
and the artificial demand for foreign credits, the
insufficiency of financial revenues from foreign
economic activities, and the reduction of the
country 's currency reserves. This process leads to
a decrease in the stability of all segments of the money
market, money circulation and aggravation of the
problems of the national economy.

The sphere of activity of NFI is no exception,
with the help of these institutions various credit
and financial operations are carried out, funds are
legalized (laundered), and all this is preceded by the
commission of certain violations in the financial
sphere. Therefore, it is not surprising that at this
stage of development of the society, the priority
direction in the field of national security is precisely
financial security. The economic and financial
development of a country determines its future,
opportunities and potential. Financial security is
not only one of the most important components
of the system of state interests, but also a decisive
condition for observance and realization of both
state and non-state interests of the country. The issue
of regulation of administrative and legal relations in
the sphere of ensuring financial security occupies
one of the first and most acute positions today,
especially in Ukraine, and remains the most relevant.

The purpose of this article is to clarify the
definition and structure of financial security.

2. The most important element
of the country's economic security
in modern conditions is financial security

It should be noted that, as A. I. Bondarenko rightly
states, "the most important element of the country 's
economic security in modern conditions is financial
security, since the influence of global financial
systems on an individual state is shifting to a
qualitatively new level. Taking into account the
dominant position of the financial component in the
modern economy, we have the right to characterize
the latter as an economy managed by financial
mechanisms with the help of financial tools, financial
incentives and for financial purposes." (Bondarenko,
2018) It should be added that the level of
opportunities for economic security in the matter of
protection of the national economy largely depends
on financial security and its optimal state. According
to Yu. V. Truntsevsky, "the concept of financial
security is the most important element of a broader
concept – economic security. Thus, one of the
significant aspects of ensuring the economic security

of the country is the state of its financial system
(the state budget and other institutions), the ability of
this system to provide the state with financial means
sufficient to perform internal and external functions."
(Truntsevskiy, 2007) Undoubtedly, such activity
occupies one of the important roles among the vectors
of state policy and is aimed both to promote the
development of economy and to minimize the risks
of appearance of new destructive factors for it, as well
as to prevent strengthening of destructive influence
of the existing ones (Melnyk, Ivashchenko, 2018).

It is impossible to carry out a balanced policy of
effective protection of national economic interests
without a stable functioning financial system and,
consequently, an adequate material base. Based on
this, V. I. Melnyk suggests that such a subsystem
significantly influences the economic component.
This is explained, first of all, by the fact that it is the
basis for the necessary stability and competitiveness
of the economy. The level of capabilities of the
studied component of state security depends on its
optimal state in terms of the real ability of material
support to protect the national economy (Melnyk,
2020). Carrying out general characterization of
financial security in the field of NFU activity as an
object of administrative and legal protection and
clarification of its role for the national economy,
in authors' opinion, it is appropriate to dwell on
the conceptual definitions. Any research is based
primarily on clarifying the terminology and its place
in science, comparing it with foreign research and
determining its place in public life (Cherniei, 2015).
The existence of generally accepted definitions
indicates a certain level of scientific progress in this
or that branch of science at the current stage of
development. And clarifying the meaning of
a certain terminological unit and defining its
essence makes it possible to avoid vagueness and
ambiguity while characterizing it. Obviously, this will
contribute to consistency, logical order and
unification of terminology, because similar cases of
inconsistencies have repeatedly become the subject
of active discussion among representatives of
scientific, expert and professional communities.

Studies on the problems of defining the essence
of administrative-legal relations, as well as their
structure and types, are widely represented
in scientific literature. Moreover, the modern
doctrine of administrative law primarily takes into
account the trends of humanization of science,
therefore the essence of administrative law shifts
to the provision of services to the population,
and not to the administration of power. Thus,
taking into account the content of administrative-
legal relations, which are the material result
of the implementation of the norms of
administrative law, it is possible to speak about the

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Vol. 9 No. 2, 2023
formation of a modern paradigm of administrative-
legal relations.

V. B. Averianov (Averianov, 2003) believes
that administrative-legal relations are social
relations regulated by legal norms, in which their
parties (subjects) are interconnected and interact
through the exercise of subjective rights and
obligations established and guaranteed by relevant
administrative and legal norms.

3. Approaches to defining
the concept of economic security

According to the first approach, economic security
is a certain state of economy, capable of resisting
external and internal threats. Thus, L. P. Honcharenko
says that economic security is a state of economy
that ensures a sufficient level of social, political and
defense existence and development of the state,
invulnerability and independence of its economic
interests in relation to possible external and internal
threats and influences (Honcharenko, Akulinina, 2015).

V. S. Pankov, who studied national economic
security, understood it as a state of the national
economy characterized by stability, "immunity "
to the action of external and internal factors that
interfere with the normal functioning of social
reproduction and undermine the achieved standard
of living of the population, thereby causing
increased social tension in society, as well as a threat
to the very existence of the state (Pankov, 1992).
V. O. Honcharova defined national economic
security as such a state of national economy in which
stability and ability to withstand adverse conditions
for the development of internal and external
processes are preserved (Honcharova, 2001).

According to the second approach, methods of
neutralization of existing threats were determined
as a key element of economic security. In particular,
O. V. Skoruk emphasized that economic security of
the state is the state of its economy, which ensures
that sustainable and scientifically based methods
of neutralizing the negative impact of internal and
external threats are created, the necessary
conditions for stable socio-economic development
of the state, protection of national economic interests
and improvement of the welfare of citizens appear
(Skoruk, 2016).

Almost similarly, Z. V. Hbur substantiated the
opinion that economic security is ensured by stable
and justified methods of leveling the influence of
threats from the internal and external environment,
which creates suitable conditions for the
development of a stable socio-economic system
(Hbur, 2018). In his works, V. I. Muntiian defined
economic security as a national complex of mea-
sures aimed at permanent and stable development of

the state economy, which includes a mechanism for
countering internal and external threats (Muntiian,
1998). According to the third approach, economic
security is associated with the ability of the
economy to develop in order to ensure sustainable
development of the state. For example,
Ya. A. Zhalilo says that economic security is a
complex multifactorial category that characterizes
the ability of the national economy to expand
reproduction in order to satisfy at a certain level
the needs of both its own population and the
state at a certain level, and to resist the destabilizing
effect of factors (Zhalilo, 2001).

T. V. Tsvihun points out that economic security
implies the ability of the national economy to ensure
its independent development, stability of civil
society institutions, sufficient defense potential of the
state under various adverse conditions and events,
as well as the ability of the country to protect its
own interests from external and internal threats
(Tsvihun, 2017).

At the same time, a broader definition of
economic security was formulated by D. O. Koshikov,
with whom this paper fully complies.

Thus, economic security is a component of the
national security of Ukraine, which represents
the state of social relations formed with regard
to the distribution, exchange and consumption of
material and immaterial goods and services, which
characterizes their safety and resistance to external
and internal threats, ensures the protection of national
economic interests, promotes the realization of
socio-economic rights and freedoms of citizens, and
also creates conditions for further development and
growth of the national economy and ensures the
state's competitiveness in the global economic
environment (Koshykov, 2020).

4. The concept of financial security
Based on the above, the financial security of Ukraine

should be understood as a complex, dynamic, social
system with an extensive network of interconnected
and interdependent elements and connections,
which ensures the state's ability to effectively form,
preserve against depreciation and rationally use
financial resources aimed at stabilizing social-
economic development of the country, ensuring its
stability, as well as the formation of prerequisites
for maintaining the integrity and unity of the state
financial system, servicing financial obligations.
In comparison with other subsystems, it has the
closest connection with the economic component,
taking into account its really important role.

Having systematized scientific views on the category
"financial security ", O. V. Tikhonova proposes to
emphasize another approach to the determination of

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Vol. 9 No. 2, 2023
financial security – behavioral (behavioristic). Thus,
in her opinion, the definition of "financial security "
is interpreted according to one of the following
approaches: functional, institutional, behavioral and
complex (Tykhonova, 2012).

5. Administrative and legal relations
in the field of financial security

Administrative-legal relations in the field of
financial security are regulated by legal norms.
Social relations in the sphere of financial security are
regulated by legal norms in which their parties
(subjects) are interconnected and interact through
the exercise of subjective rights and duties
established and guaranteed by the relevant
administrative-legal norms and the state. According
to V. A. Lipkan, such administrative-legal relations
are a type of administrative-legal relations,
therefore, endowed with some characteristic features
(Lipkan, 2008):
– оbligations and rights of the subjects and objects
of relations connected with the activity of state
administration bodies;
– administrative-legal relations in the sphere of
security are a part of relations in the sphere of
administration, they arise in everyday practical
implementation of tasks and functions of the state
to ensure financial security;
– in these relations, one of the subjects is a state
administrative body or a public organization vested
with state powers in the sphere of financial security;
– these relations arise on the initiative of either
the object or the subject, and the consent of the other
party is not a mandatory condition for their occurrence;
– administrative-legal connection is a special
relationship between its participants, one of which,
under the given circumstances, has the right to
demand from the other such behavior as is provided
for by the administrative-legal norm;
– the subject of security management is obliged to
implement its own material, legal and procedural
rights, i.e., the right is also considered as the
obligation of the subject of administrative-legal
relations in the field of financial security;
– in case of violation of the norms regulating
public relations in the sphere of financial security, the
violator is liable both to the other party and to the state;
– administrative-legal relations in the sphere of
financial security are not always relations carried out
on the basis of power and coercion. They can be carried
out both on the basis of authority and subordination,
as well as on the basis of equality of the parties, when
each party must fulfill certain requirements of the legal
norm. Therefore, the existence of mutual rights and
obligations is an inherent feature of administrative-
legal relations in the sphere of financial security;

– sanctions applied to the parties of administrative
and legal relations in the field of financial security
depend on the degree of public danger of the offense;
– disputes arising between the parties to administrative
and legal relations shall be settled in administrative
and other courts.

Depending on the characteristics of the participants,
administrative and legal relations can be internal
and external. In the first case the obligatory body
enters into relations with other bodies of providing
financial security, in the second – interacts with
citizens, non-state enterprises providing services
in the field of financial security. However, the state,
represented by the authorized bodies, by means
of coercion and management, establishes and
implements the relevant rights and obligations, rules
and norms of conduct in clearly defined spheres of
public life.

Therefore, the primary role in determining the
content of administrative-legal relations belongs
to their parties. These parties are the subjects of
providing financial security – the bearers of rights
and obligations in the sphere of financial security
provided by administrative and legal norms, who are
capable of exercising these rights and fulfilling the
assigned obligations.

The decisive feature that distinguishes the content
of security from administrative-legal positions in the
field of financial security is the fact that one of the
parties is a holder of legal authority over other
subjects, which is granted to him by administrative
norms. Such subjects are subjects of financial security.
Administrative-legal relations are formed when these
subjects exercise their powers and administrative
functions (Bryhinets, 2017).

In general, administrative and legal relations in the
sphere of financial security are characterized by two
important features: on the one hand, they are forms
of social relations, since people or their associations
necessarily participate in them, and on the other
hand, they are forms of organizational relations,
which in the process of their implementation
solve the tasks of administrative activity to create
favorable conditions for the realization of national
financial interests.

6. The structure of the administrative relations
in the field of the financial security

Administrative relations in the field of financial
security have their own structure (composition).
Its elements include: subjects, objects, legal facts.

The subject of administrative relations in the field
of financial security of the NFI is the subject of
administrative law, which has entered into specific
legal relations in the field of financial security,
regulated by the norms of administrative and

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financial law, in particular: NBU, NSSMC,
Antimonopoly Committee, law enforcement bodies,
non-governmental bodies and organizations, citizens.

The subject of administrative and legal relations
in the field of financial security of the NFI is money
and credit and the NFS activity of the NFI in it.

The basis for the appearance of change or
termination of administrative and legal relations
in the field of financial security of the NFI are legal
facts (actions, events), the main feature of which
is the ability to cause legal consequences. Legal acts
meet the requirements of administrative, legal and
financial norms: administrative acts – decrees and
orders of the President, resolutions and orders of the
Cabinet of Ministers of Ukraine, etc. in the field of
financial security. The security sphere is characterized
by legal acts of an individual nature, since they
directly create specific administrative and legal
relations. Thus, administrative and legal relations are
directly created between a person appointed as the
head of the group and other employees. Unlawful
acts are crimes, misdemeanors that entail the
application of coercive measures. The commission
of a crime causes the emergence of a certain circle
of relations concerning the application of the
norms of substantive and procedural administrative
law. With regard to the special nature of security
relations, most of them are protected by criminal law
(Galunko, Pravotorova, 2021).

The main criteria for ensuring financial security
in this area are the sufficiency of financial resources,
their balance and liquidity, which enable the
sustainable development of NFIs and the banking
system in general. Elements of financial security
should include the following:
– the efficiency of the financial system, i.e., its ability
to ensure the achievement of the strategic and tactical
development goals of the NFS and NFI;
– independence of the financial system, which
means the ability of the state to independently
determine the objectives, mechanisms and methods
of its functioning;
– competitiveness of the financial system, that is,
its ability to fully perform its tasks and functions
in the conditions of existence and influence of the
financial systems of other countries and global
financial actors.

7. Financial security threats
Threats to financial security are a set of real or

potentially possible phenomena and factors that
pose a threat to the realization of national
interests in the financial sphere. Threats complicate
self-regulation of the economy and realization of
financial interests, cause financial indicators to
exceed their thresholds. It is the task of the state to

identify threats, measure the level of their danger,
take appropriate measures to prevent and eliminate
threats and negative consequences of their influence.

8. Threats to the development of the insurance
market

The following threats to the development of the
insurance market include: imperfect legal regulation
of insurance; lack of liquid financial instruments
for effective investment policy; low capitalization
of domestic insurers; delay in the introduction of
compulsory health insurance with the participation
of insurers; absence of legal basis for the introduction
of investment and pension insurance; opaque state
regulation; non-transparent financial reporting
of the insurance sector; lack of quality statistical
information in the insurance sector; low level
of services provided by individual insurers and
fraudulent schemes in the insurance sector; use of
insurance as a mechanism for optimizing taxation
and tax evasion.

Despite the nominal growth of the main indicators
of the development of the insurance market,
it remains extremely insignificant in terms of the
volume of statutory funds, equity, assets, insurance
reserves. Insurance companies do not accumulate
a significant amount of investment resources and
therefore do not have a significant impact on
the processes of expanded reproduction, growth
of the state economy and the welfare of citizens.
In the competition to attract financial resources,
the insurance market is currently losing significantly
to the banking system.

At the same time, today the risks of domestic
legal entities are not sufficiently covered by
insurance, as this area was practically not developed
ten years ago, when the risks of industrial enterprises
were not subject to insurance. The need to modernize
the insurance market of Ukraine is obvious
and it is connected with the transition from the
redistribution model of this market (in the interests
of financial and industrial groups) to the
development of real insurance. The prospects for
the development of the insurance market in
Ukraine are primarily related to the increase in the
share of long-term (cumulative) insurance. This will
require a balanced development of voluntary and
mandatory forms of insurance and the creation of
innovative insurance products.

Trust companies, credit unions, pawnshops, leasing
and factoring companies, non-state pension funds
currently have very little influence on Ukraine's
economic development. Their total assets amount
to about 0.5% of GDP. The urgent need to create a
non-state pension system in Ukraine is connected
with the need to gradually reform the existing state

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pension system and introduce elements of the
accumulation system.

Thus, unlike developed countries, where the funds
accumulated by non-bank financial institutions
are one of the most important sources of investment,
domestic insurance companies, pension funds
and mutual funds have not yet been able to attract
sufficient funds, and their financial power is
rather insignificant. The main reasons limiting the
development of domestic non-banking institutions
are the insufficient level of development of the
economy and industry, the underdevelopment of the
stock market and its infrastructure, the imperfection
of the legislative framework, and the low level of
income of the population.

9. Problems of the market of non-banking
financial services in Ukraine

According to O. S. Vlasiuk (Vlasiuk, 2014), the
main problem of the market of non-banking financial
services in Ukraine is its extremely insufficient
development. This is due to a number of reasons,
among which the following should be emphasized:

Organizational and legal:
– lack of a clear vision of NFIs in the country 's
financial and banking system, as well as a clear
government policy regarding their activities;
– incomplete and sometimes inconsistent regulatory
framework;
– minimization of state regulation and control over
NFIs, its imperfection and lack of clarity;
– inconsistency of measures concerning the
organization of state supervision over the activities
of financial intermediaries;
– lack of adequate level of market competition and
effective incentives for further development of the
network of financial intermediaries;
– unresolved issues of interaction of the NFU with
institutions and organizations of the banking sector
of the economy;
– imperfect taxation of financial intermediaries,
which leads to the concealment of activities and the
use of these institutions for tax evasion.

Economic:
– low solvent demand of legal entities and individuals
for financial services; lack of budget funds for the
organization of full-fledged financial intermediation;
significant undercapitalization of financial
intermediaries, insufficiency of their assets and
reserves to carry out full-fledged activities;
– overflow of solvent demand for financial services
to the banking system or to foreign financial
intermediaries as a result of undercapitalization.

Functional:
– a relatively narrow range of financial services offered
to clients;

– the unbalanced portfolios of financial inter-
mediaries and the virtual absence of at least minimal
risk management practices;
– extremely low technological level of operations;
– lack of proper traditions, long-term positive
experience of working with clients;
– low level of management and marketing in the market
of financial services; imperfect market infrastructure.

Personnel:
– insufficient professional level of specialists;
– actual lack of qualification requirements for many
of them.

Information and analytical:
– insufficient scientific research on the formation
and development of the insurance market, leasing and
the market of non-banking financial services in general;
– inadequate statistical base in the field of financial
services;
– poor provision of information and consulting on
financial intermediation activities;
– lack of a base of unscrupulous clients of financial
and banking institutions;
– absence of specialized publications on the topics of
insurance, leasing, non-governmental pension plans,
and so on;
– lack of ratings of financial intermediaries that would
be trusted by the market and general opacity of the
sector for potential investors, participants and clients.

The above indicates low efficiency of the domestic
market of financial services and, consequently,
a threat to financial security. At present, this field
of activity is not recognized by the society as
objectively important and necessary. The place and
role of financial intermediation in the national
economy have not yet been clearly defined.

Thus, the threats to the development of NFS in
Ukraine are as follows:
– insufficient capitalization of NFU;
– low solvency of individuals and legal entities, low
level of trust of citizens in institutional investors;
– lack of effective system of protection of rights of
consumers of financial services;
– insufficient awareness of the activities of the NFU in
Ukraine;
– low level of transparency of financial institutions;
– imperfection of the legislative framework and the
system of state regulation;
– incompleteness and inconsistency of the process of
formation of the NFU system;
– insufficient protection of investors' rights;
– lack of an effective system of protecting the rights
of consumers of financial services;
– insufficient awareness of the activities of the NFU
in Ukraine.

To ensure an acceptable level of financial security
of the state, it is necessary to create adequate reserves
and purposefully apply budgetary, tax, monetary

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and other mechanisms of state regulation that
correspond to market conditions (Vlasiuk, 2014).
Security itself in the monetary and credit sphere
(monetary and credit security) is focused on
ensuring the stability of the monetary unit,
availability of credit resources and maintaining the
level of inflation that does not suppress economic
growth and increase the real income of the population.
Such security is manifested in monetary policy
as a set of measures in the sphere of money
circulation and credit aimed at regulating economic
growth, curbing inflation and ensuring the stability
of the monetary unit, providing employment for the
population and balancing the balance of payments.
The implementation of a well-designed monetary
policy by the state requires the separation of its
strategic and tactical objectives.

10. Factors ensuring the competitiveness
of NFS in modern conditions

Factors ensuring the competitiveness of NFS in
modern conditions should be:
– adaptation of the legislative and regulatory
framework of Ukraine to the requirements of
EU legislation and the Basel Committee on
Banking Supervision; capital adequacy (stability,
reliability, expansion of access to financial markets,
implementation of mergers and acquisitions);
– the required asset quality (liquidity, solvency,
profitability, stability, risk diversification, availability
of creditworthy borrowers);
– availability of financial innovation.

At the same time, today the NFS of Ukraine does
not properly fulfill the function of financial support
for stable economic development. In order to
minimize the risks that may result from insufficient
stability, transparency and competitiveness of the
NFS of Ukraine, it is necessary to create a body
(for example, the National Bureau for State
Regulation of Financial Services Markets), similar
to the liquidated National Financial Services
Commission, the sole activity of which will be
aimed not only at control and supervision, but
also at reforming NFIs and implementing the best
European practices. Concentration of such powers
in the NBU, whose activities cover both banking and
non-banking spheres, is burdensome and less effective.

State policy in the sphere of NFS should be aimed at:
– improvement of coordination of the activities of
financial sector regulators;
– creation of a system of risk identification,
monitoring and ongoing analysis of the financial
services market to ensure the possibility of taking
preventive measures to ensure financial security;
– increasing the transparency and openness of the
activities of financial institutions and the body

that carries out state regulation and supervision
over them;
– enhance the solvency and financial stability of NFIs;
– ensure adequate protection of consumers of
non-banking financial services;
– preventing the use of NFIs for unproductive
withdrawal of capital abroad.

Taking these measures will make it possible to
ensure protection of national interests of the state
in case of emergence and aggravation of risks of
a fragmented nature in the financial sphere, to create
a mechanism of state management of risks in the
financial sphere, to minimize the consequences
of global risks, which will contribute to balance
of the financial sphere and ensure effective
functioning of the national economy and economic
growth of the state.

11. Conclusions
Thus, in the modern conditions of reforming

economic relations, the development of financial
markets is characterized by extraordinary speed and
dynamism. In the financial industry, competitive
advantage and technology are closely intertwined
and interconnected. The growth of confidence in
the markets of financial services, the efficiency of
their work largely depends on how and by what
rules the financial sector functions. There are various
problems that need to be solved in the activities
of financial institutions in Ukraine and around
the world. The rapid growth of technologies and
communications, the development of information
technologies and their active use in the field
of financial services contribute to the emergence
and improvement of various types of crimes, the
annual losses of which are estimated at billions of
dollars on a global scale (Buha, 2020).

Therefore, the definition of the conceptual bases
for the formation of an effective and efficient
state risk management mechanism in the financial
sphere, aimed at the prevention of crisis phenomena
and minimization of their consequences, will ensure
the effective functioning of the national economy
and economic growth of the state. And financial
security of financial and credit institutions is
the main element of their economic security.
At the same time, in a certain way, it is an
independent element and represents such a state
of their financial resources, which ensures effective
(profitable) activity, protection of financial interests
and the ability to preserve their financial capabilities
under the influence of various dangers and threats.
That is, the main focus of financial security
should be aimed at ensuring the effective use of
financial resources and maintaining them at a
sufficient level for effective activity on the market

Baltic Journal of Economic Studies

Vol. 9 No. 2, 2023

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Received on: 11th of March, 2023
Accepted on: 21th of April, 2023
Published on: 23th of May, 2023

of financial services in all conditions. The latter
includes active activity in attracting financial
resources and their effective investment. Based on the
above, it can be stated that financial security covers
all aspects of financial activity of non-bank financial
and credit institutions and ensures their stability
and competitiveness on the market (Buha, 2020).

Consequently, financial security of Ukraine should
be understood as a complex, dynamic, social system

with an extensive network of interconnected and
interdependent elements and connections, which
ensures the state's ability to effectively form, protect
against depreciation and rational use of financial
resources, the system aimed at stabilizing socio-
economic development of the country, ensuring its
stability, as well as the formation of prerequisites
for maintaining the integrity and unity of the state
financial system, servicing financial obligations.