FINANCIAL ARCHITECTURE AS THE BASE OF THE FINANCIAL SAFETY OF THE ENTERPRISE

Olga Sosnovska, Maksym Zhytar

Abstract


In today’s economic realities, achieving the necessary level of financial security of enterprises is a prerequisite for ensuring their sustainable operation and the formation of competitive development parameters in the internal and external market environment. The effectiveness of this process depends on building a high-quality financial architecture as the basic structural element of the company’s financial security system. In this regard, the subject of the study is an analysis of existing theoretical approaches to the definition of financial architecture and its relationship with the financial security of the enterprise. The methodological basis of the research is the scientific development of domestic and foreign scientists, the fundamental theoretical positions of economic science in the field of financial architecture formation, financial risk management, and financial security of the enterprise. The purpose of the article is to study the essence of financial architecture in order to substantiate its determining influence on the financial security of the enterprise and ensure its sustainable functioning in an unstable development of economic processes. The article analyses the theoretical aspects of financial architecture and finds that the interpretation of this economic category is due to the existence of clear causal relationships between its constituent elements and their impact on the financial support. Proceeding from this, the definition of financial architecture is drawn as a set of interconnected structural elements such as capital structure, ownership structure and quality of corporate governance, which accumulate and mobilize financial resources, increase control over the activity of the enterprise, solve conflicts of interest between owners and other stakeholders. It is determined that the choice of principles and methods for constructing financial architecture depends on such financial interests of economic entities as forming a flexible financial potential, optimizing the structure of capital, increasing investment attractiveness, maximizing profits, and increasing the market value of the enterprise. It is proved that the result of building a flexible financial architecture is to provide the appropriate level of financial security of an enterprise by identifying, quantifying, neutralizing, minimizing, and monitoring its financial risks. It is proposed to systematize indicators of financial security level assessment on the most typical of its functional components, among which investment, credit, emission, innovation, and currency can be distinguished. It has been established that ensuring the appropriate level of financial security will contribute to achieving financial sustainability, forming qualitative financial potential, providing competitive advantages, harmonizing interests of economic entities, and creating an effective system of economic security of the enterprise. It is concluded that the construction of high-quality financial architecture is the basis of financial security of an enterprise, the level of which depends on the proper management of financial risks and ensuring an adequate level of safety of all its functional components. As a criterion for the effectiveness of the process of ensuring the financial security of the company, sustainable development of the enterprise was determined in the conditions of an unstable economic environment.

Keywords


financial architecture, financial security, capital structure, ownership structure, quality of corporate governance, risk management

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DOI: http://dx.doi.org/10.30525/2256-0742/2018-4-4-334-340

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