DOMESTIC GOVERNMENT LOAN BONDS AS A CORPORATE INVESTMENT POLICY TOOL

Abstract

This paper asserts that domestic government loan bonds is an effective investment tool and offers a framework for evaluating government bonds as an investment instrument within a corporate business. The research findings demonstrate that the investment success of the corporate enterprise depends on domestic market bond liquidity and the risks associated with the external environment uncertainty. The purpose of this study is to assess the role of domestic government loan bonds within corporate investment policy. To achieve the research objective, the following methods have been employed: a synthesis – to identify the nature of corporate investment policy, methods of economic statistical analysis – to provide a government bond market analysis, and comparative structural analysis – to explore the preferences and benefits associated with the use of international practice in the area of developing a government debt policy. Data analysis for the period 2013-2017 indicates that the increase in domestic public debt in Ukraine negatively affects the companies in their decision to invest in government bonds. The operation of the united forces (formerly, the anti-terrorist operation) in Eastern Ukraine has triggered a 10 times increase in domestic public debt compared with the real GDP growth. The public increased to 143,2 billion UAH which was perceived as knock-on effects of inflation and 14% of GDP behind the banking crisis and the cost of its overcoming within 2014-2016. Corporate investing in domestic government loan bonds depends on the area of corporate enterprise operation. It is argued that companies with superior financial performance should invest in bonds, thus contributing to their further growth by creating a solid background for building competitiveness. High risks and low financial capacity characterize other sectors of industry, which company should wait for more information before investing in government bonds. High risks and low finance opportunities feature other industry sectors, and firms in these sectors should anticipate additional information prior to investing into the government bonds.