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51ФИНАНСЫ, ДЕНЕЖНОЕ ОБРАЩЕНИЕ И
КРЕДИТ
THE IMPACT OF MONETARY POLICY ON ECONOMIC
DEVELOPMENT OF THE KYRGYZ REPUBLIC Mehmet A.A.1, Halit K.2, Atabaev N.3 (Republic of Kyrgyzstan) Email: Mehmet223@scientifictext.ru
1Mehmet Ali Ates - PhD Candidate, ECONOMICS DEPARTMENT, FACULTY OF ECONOMICS AND FINANCE, BISHKEK HUMANITIES UNIVERSITY AFTER K. KARASEAV; 2Halit Karakas - PhD Candidate, SCIENTIFIC RESEARCH INSTITUTE OF INNOVATIVE ECONOMICS, KYRGYZ ECONOMIC UNIVERSITY; 3Atabaev Nurlan - Associate Professor, PhD in Economics, SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION, AMERICAN UNIVERSITY IN CENTRAL ASIA (AUCA), BISHKEK, KYRGYZSTAN
Abstract: this study attempts to analyze the effect of monetary policy on economic development in case of Kyrgyz Republic. To do so, primarily, the effectiveness of monetary policy instruments applied by National Bank of Kyrgyz republic (NBKR) are examined. Following the instrument effectiveness examination, obstacles that hinder effective monetary policy provision are identified and efficiency of transmission channel of interest is analyzed. The result of the paper reveals that dollarization, informal sector, underdeveloped financial sector distort the effectiveness of monetary policy of NBKR.
Keywords: monetary policy, monetary policy instrument, transmission channels, economic development, Kyrgyz Republic.
ВЛИЯНИЕ ДЕНЕЖНО-КРЕДИТНОЙ ПОЛИТИКИ НА ЭКОНОМИЧЕСКИЙ РОСТ КЫРГЫЗСКОЙ РЕСПУБЛИКИ
12 3
Мехмет А.А. , Халит К. , Атабаев Н. (Кыргызская Республика)
1Мехмет Али Атеш - аспирант, кафедра экономики, факультет экономики и финансов, Бишкекский гуманитарный университет им. К. Карасаева; 2Халит Каракаш - аспирант, Научно-исследовательский институт инновационной экономики, Кыргызский экономический университет; 3Атабаев Нурлан - доцент, кандидат экономических наук, Школа экономики и бизнес администрирования, Американский университет в Центральной Азии, г. Бишкек, Кыргызская Республика
Аннотация: в данном исследовании рассматривается влияние денежно-кредитной политики на экономический рост Кыргызской Республики. Для этого, в первую очередь, анализированы эффективность инструментов денежно -кредитной политики, применяемые Национальным банком Кыргызской Республики (НБКР). Далее определены препятствия проведения денежно-кредитной политики, были анализированы каналы трансмиссии денежно-кредитной политики и их применения. Результат работы показывает, что долларизация, теневая экономика, неразвитость финансового сектора искажают эффективность денежно-кредитной политики НБКР.
Ключевые слова: денежно-кредитная политика, каналы трансмиссии денежно-кредитной политики, экономический рост, Кыргызская Республика.
Introduction
Monetary policy plays an important role in the economy of any country. However, in practice its impact on economic development is not always effective. In some cases, implemented monetary policy can represent a threat to the normal functioning of the economy, especially if the economy is subject to inflation (Sonicov, V.I., 2010) The inflation affect not only the depreciation of savings of the population, but also it hampers long-term planning and investment, thus contributing to the growing socio-economic tension (Fasanya O.I., 2013). Therefore, the main task in the implementation of monetary policy remains the achievement of maximum welfare for all economic agents. Monetary policy plays a significant role in the development of the economy of developed countries. However, in developing countries, including CIS countries, the role of monetary policy remains insignificant.
All CIS countries after the collapse of the Soviet Union faced high level of poverty, unemployment rate, and downturn in economic growth (Drobyshevsky A. & Kozlovskaya 2003). In the Kyrgyz Republic during 1991-1995, the GDP fell by 45%. It is also important to highlight that the main problem that faced the Kyrgyz Republic has become the high inflation, the struggle against which has continued for 24 years ineffectually because inflation continues to represent a significant problem that has a negative impact on the economic development of the Kyrgyz Republic.
For a long time, the National Bank has been fighting against inflation, and in its fight, it focuses on addressing the consequences rather than causes. The main cause of inflation is the excess of import over export. This exacerbates other problems that have a direct impact on the economy: inflation, dollarization, informal sector, instability in the financial sector (Doroftei M.I. & Paun C., 2013). By continuing to use monetary methods in overcoming inflation, the National Bank not only cannot achieve long-term effect in lowering inflation, but also contributes to the aggravation of all these mentioned problems (Zhumadilov E. & Kozubekov A, 2013; Ilyashenko 2013). To conduct fight against inflation by monetary methods is a prerogative of developed countries.
The relevance of the study
The fact that inflation remains unsolved problem during 24 years requires special attention. It tells about the inability of the National Bank to undertake right actions to address this challenge effectively. Wrong selected actions of the National Bank can have a negative impact on all economic agents, thus undermining the already weakened economic situation in the country.
The aim of this paper is to evaluate the role of monetary policy in promoting economic growth using the following tasks:
- to examine the effectiveness of monetary policy instruments used by the NBKR;
- to identify common obstacles that hinder to conduct effective monetary policy;
- to analyze the efficiency of the transmission channel of interest rates.
The object of the research paper is the monetary policy of the Kyrgyz Republic.
To investigate the role of monetary policy in the economic development of the Kyrgyz Republic, the regression analysis was conducted.
The remainder of this paper contains the impact analyses of monetary policy on economic development of the Kyrgyz Republic, conclusion and recommendations.
The impact analyses of monetary policy on economic development of the Kyrgyz
To investigate the role of monetary policy in economic development of the national economy, the econometric model was built.
The dependent variable is GDP growth. As the independent variable, money supply (M2), inflation rate, real interest rate, exchange rate, discount rate, and the volume of credit provided by commercial banks were taken. The data are obtained from the National Bank of the Kyrgyz Republic.
Table 1. Econometric model1
GDP growth Coef. Std. Err. t P>|t|
RealM_2 inunitsoms 1.027065 .004008 251.68 0.003
RealM_2 inunitsoms2 -.017283 .000059 -292.77 0.002
inflation_rate 2.613208 .0170969 152.85 0.004
real_interest_rate -.976178 .010808 -90.32 0.007
real_interest_rate2 .037134 .0004847 76.62 0.008
exchange_rate 19.69776 .1754404 112.28 0.006
exchange_rate2 -.230577 .0020058 -114.96 0.006
L1GDP_growth -1.027389 .012759 -80.52 0.008
discount_rate 5.776969 .0572944 100.83 0.006
discount_rate2 -.531863 .0042469 -125.24 0.005
Logvolume of credit 1.638322 .029608 55.33 0.012
-cons -.456.7323 4.223414 -108.14 0.006
Coefficient on M2 is positive and statistically significant, meaning that a one-percentage point increase in this variable leads to increase in economic growth by 1,02.
Quadratic functional form on M2 was applied. The coefficient is -0,017 that is negative and statistically significant which means that in two periods GDP growth will be 1,02-2*(-0,017)=1,054.
Generation of the money supply in the Kyrgyz Republic occurs due to the intensive increase in the monetary base and a small increase in money multiplier (M=M*MB, where M-money supply, m is the multiplier, MB is the monetary base). In the growth of the money supply participates only NBKR due to issue of reserve money, the role of commercial banks is negligible.
In the Kyrgyz Republic, the money multiplier is 1.1, whereas this ratio must be greater than 5.
The ratio of M2 to GDP is 31%. In developed countries this ratio is much more than in the Kyrgyz Republic, for example, in the UK this ratio is 84%, in the U.S. is 61% and in China - 181%. This low rate could be explained by that fact that National bank aims at reduction inflation (Ataev, 2012), but taking into account that inflation in Kyrgyzstan caused by non-monetary factors to fight against inflation applying monetary methods is unproductive (Nurbek J., 2012). Because of lack of funds, the availability of bank loans to households and businesses remains low, interest rates are very high.
Coefficient on inflation is 2,6 that is also positive and statistically significant. A one-percentage point increase in this variable leads to increase in economic growth by 2,6.
The analysis of the relationship between inflation and economic growth presented in the scientific work of the National Bank. In that paper, the inflation rate was studied from 1994 to 2012.
According to that paper, with the collapse of the Soviet Union, the relationship between economic growth and inflation was characterized from the positive and negative sides.
The period from 1994 to 2006 indicates a negative relationship between the above indicators. It was due to the collapse of the Soviet structure, entry of Kyrgyzstan to the WTO. These factors led to a high dependence of the economy on imports, including consumption and investment (Jolamanova M.T., 2014).
The period 2007-2012 is characterized by positive relationship between economic growth and inflation. It was caused due to the development of industries such as
1 NBKR Monetary, Banking and External sector statistics [Electronic resource]. URL: http://www.nbkr.kg/index.jsp?lang=RUS/ (date of access: 01.05.2016).
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construction, transport and communications, trade and also due to the growth of remittances and the growth of investment activity1.
Coefficient on real interest rate is -0,98. A one-percentage point increase in this variable leads to decrease in economic growth by 0,98.
Pursuing the goal of price stabilization, the National Bank should ensure the growth of deposit interest rate and lending interest rate, which, in turn, should encourage people to save more and spend less (Ekmekgioglu, 2012). This mechanism should lead to a drop in demand, which, in turn, should lead to falling prices. However, in the Kyrgyz Republic, there is opposite situation: lending interest rates are high, but deposit interest rates are low.
During the last ten years interest rate spreads in Kyrgyzstan was at 15%. For comparison, in the U.S. in 2012 the spread was at 3%, in Kazakhstan at 6%.
Coefficient on exchange rate is 19,6 that is positive and statistically significant. At the same time there is no correlation between exchange rate and inflation (-0,08).
However, taking into account that import accounted for over 60% of GDP, any change in the exchange rate can have a significant impact on inflation. The work Isakova concludes that the change in the nominal exchange rate by 1 percent leads to changes in the CPI (consumer price index) by 12 percent, the exchange rate is closely correlated with inflation, which does not correspond to the analysis.
Analyzing discount rate, the results showed that increase in the discount rate by one percentage point leads to GDP growth by 5.8. Also the discount rate is not correlated with the real interest rate (-0.02). However, the discount rate is closely correlated with inflation (0,7).
Analysis showed that the volume of credit positively influence on economic growth. A one-percentage point increase in the volume of credit leads to increase in GDP growth by 1,6.
Table 2. Correlation coefficients2
GDP_growth M_2 inflation_rate real_interest_r ate exchange_rate
1,0000 0,1251 0,4257 -0,2239 -0,1833 GDP_growth
1,0000 -0,4196 -0,0853 -0,4720 M_2
1,0000 -0,4209 -0,0808 inflation_rate
1,0000 0,3914 real_interest_rate
1,0000 exchange_rate
discount_rate credit mln
0,2481 0,1210 GDP_growth
-0,3210 -0,3154 M_2
0,7373 0,1544 inflation_rate
-0,0271 -0,4933 real_interest_rate
0,2221 0,2259 exchange_rate
1,0000 -0,2195 discount_rate
1,0000 credit mln
1 Zhumadilov E., Kozubekov A. The Analysis of the relationship between the dynamics of inflation and economic growth in Kyrgyzstan. P. 15. Bishkek, 2013.
2 NBKR. Monetary, Banking and External sector statistics. [Electronic resource]. URL: http://www.nbkr.kg/index.jsp?lang=RUS (date of access: 01.05.2016).
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Discussion
Inflation certainly affects the development of the economy of any state, as it creates a threat to all agents of the economy. Dynamics of prices distorts relative prices and profitability, resulting in inefficient use of resources. It forces people to keep their savings in foreign currency, thereby increasing the level of dollarization in the country. Inflation has a negative impact on the investment process. The unpredictability of inflation with high interest rates makes it impossible to assess the economic efficiency of investment projects. Inadequate knowledge about the effectiveness of investment projects has the most negative impact on the economy. Non-payment of many loans associated with the changed inflation environment. Inflation, redistributing income, increases social differentiation and poverty. Inflation is a source of development of the informal sector1.
All these negative aspects of inflation manifested in the economy of the Kyrgyz Republic, thus hindering its economic development. The international monetary fund and international financial organizations recommend that countries with economies in transition should establish strict control over the money supply. Undoubtedly, the inflation is generated by monetary expansion, in other words, there is a positive and high correlation between the money supply and inflation. However, this relationship is effective only in the case when the inflation is caused by monetary factors. In the case of transitional countries, the shrinking of the money supply to combat inflation may be ineffective and may even result in a negative impact on the economy.
In the case of the Kyrgyz Republic, the correlation between monetary aggregate M2 and inflation is -0,4196, this relationship confirms the fact that the contraction of the money supply will not determine the success in restricting inflation. Such a negative correlation between these indicators was observed in almost all transition economies: Hungary, Slovenia, the Czech Republic, Slovakia, Moldova, Azerbaijan, Kazakhstan, Estonia, Lithuania, China and Vietnam, as well as in Latvia and Russia. The World Bank study also identified a negative relationship between monetization of the economy and inflation, that is, the more money is in circulation the less inflation. This result can be explained due to the fact that the artificial reduction of the money supply causes an increase in interest rates, which leads to higher costs of enterprises. It is not taken into account that in the transforming economy monetization ratio is in a critical condition. Till a critical level (not less than 60% of GDP) money supply is replaced by US dollars, thereby hindering the regulation of most money. Thus, due to the rising cost of commercial loans that is several times higher than the profitability of the real sector, the monetary resources go into the field of trade and financial speculation. Thereby authorities do not achieve the declared goal of suppressing inflation and they also lose significant lever of control over the monetary system of the country 2.
In the Kyrgyz Republic, the fight against inflation by monetary methods is conducted for more than twenty years and the National Bank achieves results only for a short period. The long-term effect is absent because the problem with inflation continues to remain in the first place. This result suggests that the National Bank should think about the long-term effect in reduction inflation and consider other methods that would provide the low rate of inflation and would not hurt the country's economy.
However, to accomplish this task, it is necessary to consider the problems that impede the effective conduct of monetary policy and thus do not allow to achieve this goal. IMF highlights common barriers in realization of effective monetary policy. One of such obstacles includes a high degree of dollarization. High dollarization, which does not allow National Bank to control monetary aggregates, distorts the relationship between the money supply and inflation, increases the dependence of the real economy on the exchange rate
1 Kovalev M.M. Anti-inflation policy for the Republic of Belarus, Bulletin of the Association of Belarasian banks. № 48, 2000. P. 22-24.
2 Pelikh S.A. Anti-inflationary policy of the state in transition economies. P. 78, Minsk, 2009.
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(Atabaev , 2014)1. The correlation coefficient between monetary aggregate M2 and inflation rate, as mentioned above, was -0.4. This value completely distorts the relationship between these two variables.
Also because of the high degree of dollarization, the change in the discount rate on interest rates of banks in national currency has not effect, which was confirmed by the correlation coefficient (0.02).
In order to understand how to overcome the high degree of dollarization, it is necessary to identify the factors which contribute to dollarization. One of the main factors, influencing the dollarization is the dynamics of the macroeconomic indicators. As we know, if the import exceeds export, the demand for foreign currency to pay for import increases, resulting in the rise of that foreign currency. Another factor that contributes to dollarization is inflation. Since when inflation is high, the demand for national currency falls, as the result, the demand for the dollar during such periods increases. For instance, in Kyrgyzstan, when the annual inflation rate in December 2014 reached 10.5%, the growth of deposits in foreign currency resulted in a rise of broad money M2X (0,9%) that includes deposits in foreign currency (in IV quarter of 2013, the growth was 6.7 %).
Another problem hindering successful development of the monetary policy is the narrowness of the financial sector (Atabaev, N. & Ganiyev, J, 2013). Developed financial system promotes growth in economic activity.
The development of financial institutions and markets stimulates economic activity by increasing the efficiency of resource allocation, improving the quality of corporate control, mobilizing capital and increasing the effectiveness of risk management. At the same time, in more developed countries, the economy itself is more diversified, and innovations in the financial sector have lower cost. This promotes more rapid development of financial institutions and markets2. One of the factors hindering the development of the financial sector is the presence of inflation. Ponomarenko (2004) notes that as prices rise, investors replace non-interest cash assets by interest or indexed assets as well as by assets denominated in foreign currency or non-monetary assets. Therefore, the financial activity is reduced because of inflation.
One of the indicators of financial activity is the ratio of credit to GDP. The following graph, which shows the dynamics of this index since 2000, quarterly, illustrates that the indicator on the first stage of the reformation was very low, however, since 2007 this indicator was noticeably increased. In 2015 in the last quarter, this indicator reached 105%. In such developed countries as USA, this indicator for 2014 reached 253.5%, in Germany- 140%, in Switzerland-176%, in the Netherlands- 230%. This comparison indicates that the credit-to-GDP ratio of the Kyrgyz Republic remains low comparing with developed countries.
Such result can be explained by the fact that the commercial banks do not always pursue the aim of receiving profit due to the attraction of deposits and providing loans. Another measure that characterizes financial sector is the difference between lending interest rate and deposit interest rate. As noted earlier, in the Kyrgyz Republic the lending interest rate is high, whereas the deposit interest rate is low. The spread of the Kyrgyz Republic from 2003 to 2012 did not drop below 15%.
Another problem that hinder the development of monetary policy is low competition in the banking sector.
The growth rate of the economy influences on the stability of the banking sector of the Kyrgyz Republic. In the structure of Kyrgyzstan's GDP, 37.8%- sectors producing goods; 48.1%- sectors providing services; 14.1% -taxes without subsidies. These indicators tell that the Government of the Kyrgyz Republic has to have two tasks: first, to increase the share of
1 Nurlan Atabaev. The Impact of monetary policy on the economic development of the Kyrgyz Republic. P. 13-14. Bishkek, 2014.
2 Ponomarenko S. The Financial sector and the costs of inflation in the countries with economies in transition, Scientific papers No. 83 R. P.16. Moscow, 2004.
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farms that will contribute to GDP; second, to achieve accelerated expanding production that will be export-oriented1.
To achieve this goal the role of banks plays a significant role. At the beginning of 2015, there were 24 banks and 292 of their branches. As noted above, there has been increase in lending of the economy. As a consequence, this led to the increase in credit risk. It should also be noted about the presence of liquidity risk, which is manifested in the decrease of liquidity due to the reduction in the share of liquid assets and increase in the share of the loan portfolio. So, the National Bank pursuing the policy of regulation of inflation, contributes to liquidity risk, which, in its turn, may adversely affect the stability of banks.
Another problem, which hampers the implementation of monetary policy, is poorly developed interbank market, money market and securities market.
The securities market of the Kyrgyz Republic is represented by government securities and corporate securities. The government securities market consists of a limited number of types of securities, which include Government Treasury bills (up to 1 year) and State Treasury bonds (up to 2 years) issued by the Ministry of Finance of the Kyrgyz Republic, and this market also includes the notes of the National Bank of the Kyrgyz Republic (up to 28 days). The secondary government securities market does not exist, the exception is REPO operations of the National Bank carried out with the aim of managing the liquidity of the banking system. The volume of the government securities market issued by the Ministry of Finance of the Kyrgyz Republic is 8.9 billion soms (3% to GDP) on the end of 2012.
The corporate securities market includes debt securities (bonds) and equities2.
Among the main problems, hindering the development of monetary policy, is the informal sector of the economy. In the Kyrgyz Republic the number of companies operating in the shadow economy has declined. However, the number of companies that underestimate the reported revenue increased, depriving the economy of substantial amount of capital. The share of individual entrepreneurs that underestimate their income has become 19%, the share of hidden income among the individual entrepreneurs has become 37%. A powerful shadow economy develops and thrives where conditions permit. To such conditions we usually refer the presence of weak legal framework and weak legal compliance3.
In fighting against informal sector, the National Bank should be aimed on the reduction of money in circulation outside the bank. The graph below shows that from 2007 to 2014, the money outside banks tend to increase.
70 000,0 60 000,0 50 000,0 40 000,0 30 000,0 20 000,0 10 000,0 0,0
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Fig. 1. The dynamics of the money outside the banks4
1 International Banking Council, Current trends and expected perspectives of development of national banking sectors.
2 The national Institute for strategic studies of the Kyrgyz Republic, Assessment of the conditions for conversion the financial system of the Kyrgyz Republic to international financial center.
3 The project of IFC, The improvement of investment climate in the Kyrgyz Republic.
4 NBKR. Osnovnye indicatory Bsnkovskogo sektora. [Electronic resource]. URL: http://www.nbkr.kg/index1.jsp?item=1482&lang=KGZ/ (date of access: 01.05.2016).
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The more cash payments are involved in transactions, the more it contributes to the formation of the shadow economy. In contrast, the more non-cash payments are involved in transactions, the less shadow economy becomes. For example, in 2011 in the developed countries (Germany, UK) the level of non-cash payments per capita was in the range of 200 - 350 payments per year, and the level of shadow economy was estimated below 15% of GDP. In the developing countries (Bulgaria, Romania) the level of non-cash payments per capita was less than 50 payments per year, and the level of shadow economy exceeded 25 - 30% of GDP1.
Another issue that requires attention is the dominance of fiscal policy. Fiscal policy certainly has an impact on the conduct of monetary policy of the National Bank. To assess fiscal policy the fiscal impulse was used.
This indicator allows to assess the impact of fiscal policy on aggregate demand. The fiscal impulse is positive when the fiscal policy is expansionary and negative when the policy is restricted. In the Kyrgyz Republic for 2004-2010 the fiscal impulse amounted to 7.2% of GDP, indicating that fiscal policy was soft, and this contributed to the growth of aggregate demand.
In 2007 and in 2009, the fiscal impulse was positive. In these years, there was an increase in inflation, one cause of which was the fiscal policy. This occurs because tax revenues could not cover budget expenditures. The slowdown in business activity in the country, the reduction of volumes of import and the changes in the framework of the adoption of the new Tax code (reduction in VAT rate, the reduced rate of sales tax, temporary moratorium on real estate tax) contributed to decrease in tax revenues (Kerimkulova, 2011)2.
To influence on the economy through fiscal policy would be possible if there were not the high level of debt in the expenditure of the state budget. Stimulating the economy by increasing deficit could lead to a decline in economic activity due to rising interest rates and inflation.
Another important problem that requires immediate solution is the degree of independence of the National Bank. While legislation stipulates a high degree of de jure independence of the National bank, de facto independence is hampered by frequent government statements and judicial actions. The Kyrgyz government affects the policies and decisions of the National Bank.
To sum up, there are many problems that affect the efficient conduct of monetary policy of the Kyrgyz Republic. However, the measures of monetary policy intensify many of the problems. As it was proven, the reduction in the money supply only exacerbates inflation, which in turn has a negative impact on the economy. This problem requires a radical solution.
Conclusion and Recommendations
In conclusion, we summarize all the problems faced by the National Bank in implementation the monetary policy:
- High dollarization, which limits the control of the Central Bank over the monetary aggregates and distorts the relationship between the money supply and inflation. It increases the dependence of the real economy on exchange rate. Also because of the high degree of dollarization, the discount rate does not have impact on interest rates in national currency, which was confirmed by the correlation coefficient (0.02).
- The narrowness of the financial sector;
- Low competition in the banking sector;
- Poorly developed interbank market, money market and stock market;
- Informal sector;
- The dominance of fiscal policy;
1 Panov G.S., Valetdinova E.N. Limitation of cash circulation in the fight against the shadow economy, p. 147. Moscow State Institute of international Relations. Moscow, 2012.
2 Kerimkulova G. Fiscal aspects in the conduct of monetary policy in the Kyrgyz Republic. P. 15. Scientific paper of NBKR. Bishkek, 2011.
- The degree of Central Bank independence.
Taking into account the results of econometric model, international experience and the recommendations of the IMF, the National Bank can improve the monetary policy due to the implementation of the following procedures.
- NBKR should aim at ensuring not only price stability but also economic growth.
- According to the analysis, the increase in the volume of credits by 1 unit leads to the increase in the economic growth by 1.6. However, the lending channel is limited because of low level of lending by commercial banks.
- It is necessary to increase the efficiency of the transmission channel of interest rates by improving the relationship between monetary policy instruments and lending interest rates of commercial banks. It can be carried out through activization of discount rate1.
- Development of secondary financial market can help to reduce the degree of dollarization.
- To preserve the independence of the National Bank in the choice of goals and the selection of tools.
- It is necessary to explore ways to increase public confidence in the banking system. -To improve financial literacy that will contribute to the development of financial market -To set up an expert group to monitor the conduct of monetary policy.
Taking into account all the methods suggested to overcome the barriers that hamper effective implementation of monetary policy, the priority is given to the promotion of the economic activity of the country.
We have listed all of the problems that face the National Bank. These problems include dollarization, informal sector, underdeveloped financial sector. Econometric model demonstrated that these problems are intensified by the current monetary policy of the National Bank. In other words, the National Bank through its policy contributes to the development of these problems and these problems than distort and hamper monetary policy of the National Bank. If the National Bank does not begin to pursue the aim of stimulating the economy, it never achieves long-term effect in lowering inflation and it also exacerbates all of the problems that has the economy of the Kyrgyz Republic nowadays.
References
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FINANCIAL MANAGEMENT OF RUSSIAN ENTERPRISES IN MODERN CONDITIONS Buryy D.A. (Russian Federation) Email: Buryy223@scientifictext.ru
Buryy Dmitry Alekseevich - Student, HIGHER SCHOOL OF ECONOMICS, MANAGEMENT AND LAW, NORTHERN (ARCTIC) FEDERAL UNIVERSITY, ARKHANGELSK
Abstract: this article describes issues related to the understanding of various aspects of financial management of Russian enterprises in modern conditions. By using our experience and the experience of other scientists, it reveals the essence of both general and private understanding of financial management in the modern world. By using its own experience and that of other scientists, it reveals the essence of both general and private understanding of financial management in the modern world. The author believes that the company should take into account the level of its current state, distinguished as one of the key financial management problems during the crisis questions the financial recovery of enterprises. Keywords: enterprise finance, financial management, financial management.
ФИНАНСОВЫЙ МЕНЕДЖМЕНТ РОССИЙСКИХ ПРЕДПРИЯТИЙ В СОВРЕМЕННЫХ УСЛОВИЯХ Бурый Д.А. (Российская Федерация)
Бурый Дмитрий Алексеевич - студент, Высшая школа экономики, управления и права, Северный (Арктический) федеральный университет, г. Архангельск
Аннотация: в данной статье рассматриваются вопросы, связанные с пониманием различных аспектов финансового менеджмента российских предприятий в современных условиях. Автор, используя свой опыт и опыт других ученых, выявляет сущность как общего, так и частного понимания управления финансами в современных условиях. По мнению автора, на предприятии следует учитывать уровень его текущего состояния, различающиеся в качестве одной из ключевых проблем финансового управления в период кризиса вопросы финансового оздоровления предприятия.
