SHADOW ECONOMY: THREATS TO THE NATIONAL FINANCIAL SYSTEM AND WAYS TO SOLUTION

Abstract

The shadow economy represents a significant threat to the national financial system of Ukraine. This is an economic activity that is hidden from society and the state, is not controlled and is not taken into account by state authorities. The main goal of this study is to analyze the shadow economy as a threat to the national financial system of Ukraine and to determine effective ways to overcome it. The purpose of the study is to identify the main causes and consequences of the shadow economy, assess its impact on macroeconomic indicators, and develop recommendations for reducing the level of shadow economy. The research uses methods of analysis of official statistical data of the Ministry of Finance of Ukraine and the National Bank of Ukraine. Econometric models are used to assess the impact of the shadow economy on macroeconomic indicators. Certain methods of assessing the level of the shadow economy, such as household expenditure, the electrical method, the unprofitability of enterprises and the monetary method, are used to analyze various aspects of the shadow activity. The study found that the shadow economy directly affects public revenue losses, budget deficits and public debt. The lack of tax revenues caused by the shadow economy leads to an increase in the budget deficit and public debt. The shadow economy also creates problems for the banking system and lending, making it difficult to monitor cash flows and credit risks. In addition, a significant share of economic activity, which is not reflected in official statistical data, makes it difficult to conduct an effective monetary policy, which affects the level of inflation. To effectively combat the shadow economy, it is necessary to apply macroeconomic financial instruments, such as reforming the tax system, using modern technologies, increasing the transparency of the work of state bodies, implementing an effective monetary policy, and stimulating investments. These measures will contribute to reducing the level of the shadow economy, strengthening the national financial system and ensuring stable economic development of the country. Only with the joint efforts of the state, business and civil society can significant success be achieved in the fight against the shadow economy.