The Scientific journal “VUZF REVIEW” published from the year 2016, is issued 4 times a year and is a scientific publication on topical problems of science in various areas of economic theory and practice, management, marketing and applied research methods. The journal is international in the essence and scope. All articles pass through the procedure of reviewing by the editorial board. Editorial Board consist of well-known scientists whose activities contributes to the integration of the global scientific community. OUR AUTHORS ARE: Leading scientists; University professors; Graduate students; Students; Foreign researchers; Scientists; Applicants for degrees
Journal of Scientific Papers VUZF REVIEW Volume 6, Issue 3, September 2021
1. ISSN 2534-9228 (online)
Journal of Scientific Papers
VUZF REVIEW
Volume 6, Issue 3, September 2021
https://papersvuzf.net/index.php/VUZF/
Public
organization:
VUZF
University
of
Finance,
Business
and
Entrepreneurship
2. VUZF review, № 6(3) – 2021 ISSN 2534-9228
Vol. 6, №3
September, 2021
Founded in 2016 by the VUZF University
The editorial board
Editor of the publication
Ivan TKACH Prof, Dr. of Sciences, Ukraine;
Deputy Editor-in-Chief
Radostin Vazov Assoc. Prof. PhD, Bulgaria;
Igor Britchenko Prof., Dr. of Sciences, Poland;
Members of the editorial board
Mitko Atanasov
Dimitrov
Prof., PhD, Chairman of the Academic Council of the Institute for Economic Research of the
Bulgarian Academy of Sciences, Bulgaria;
Igor Britchenko Prof., Dr. of Sciences, VUZF, Bulgaria;
Daniela Bobeva Prof. Dr., Professor at the VUZF, Bulgaria;
Mariana M. Petrova Assoc. Prof. PhD, St. Cyril and St. Methodius University of Veliko Turnovo, Bulgaria;
Stanislav Dimitrov Assoc. Prof. PhD, VUZF, Bulgaria;
Julia Dobreva Assoc. Prof. PhD, VUZF, Bulgaria;
Ali Veysel Assoc. Prof. PhD, VUZF, Bulgaria;
Desislava Josifova Assoc. Prof. PhD, VUZF, Bulgaria;
Manyu Moravenov Assoc. Prof. PhD, VUZF, Bulgaria;
Marián Mesároš Prof., DrSc, Rektor, University of Security Management in Košice, Slovakia;
Jozefína Drotárová PhD., Vice-rector for Science and Research (Department of Science and Research), University
of Security Management in Košice, Slovakia;
Petro Gudz Dr. of Science in Economics, Professor, Kujawy and Pomorze University in Bydgoszcz, Poland;
Tomasz Wnuk-Pel Poland;
Dio Caisar Darma Assist. Prof., Department of Management, Sekolah Tinggi Ilmu Ekonomi, Indonesia;
Nataliya Tanklevska Dr. of Sciences, Prof., State Higher Educational Institution "Kherson State Agrarian
University", Ukraine;
Vitaliy Shapran Professor, Ph.D. in Economics, Member of the National bank of Ukraine Council, Ukraine;
Dr Richard Tomlins Associate Head of School, Faculty of Business and Law, Enterprise and Innovation, School of
Marketing and Management, United Kingdom; Visiting Professor at the Early Childhood
Department, Muhammadiyah University of Ponorogo, Indonesia;
Dr Vladimir Danykiv Ph.D. in Economics, Credit Risk Manager, Fly Now Pay Later, United Kingdom;
Roman Blizkyi Dr. of Sciences, Prof. of the State University of Management, Member of the Institute of
Professional Accountants of Russia (IPAR), Russia;
Maksym
Bezpartochnyi
Dr. of Sciences, Prof. at the Department of Economics, Marketing and International Economic
Relations Faculty of Soft Engineering and Business National Aerospace University named after
N. Zhukovsky “Kharkiv Aviation Institute”, Ukraine;
Olena Chukurna Dr. of Sciences, Professor of State University «Odessa Polytechnic», Ukraine;
Viktor Trynchuk Ph.D., Assoc. Prof. of Department of Banking and Insurance National University of Life and
Environmental Sciences of Ukraine, Ukraine;
Yaroslava (Iaroslava)
Levchenko
Doctor of Economics, Professor of Kharkiv National Automobile and Highway University,
Ukraine;
3. VUZF review, № 6(3) – 2021 ISSN 2534-9228
e-mail: vuzfreview@gmail.com; tkachivan9@gmail.com https://papersvuzf.net/index.php/VUZF/index, тел. +38(093) 752-81-56
The authors of articles are responsible for the authenticity of facts, quotes, their own names, geographical names, names of enterprises,
organizations, institutions and other information. Opinions expressed in these articles may not coincide with the point of view of the
editorial board and do not impose any obligations on it.
Jurgita Sekliuckiene Professor of International Business, Kaunas University of Technology, Litva;
Sudhanshu Rai Associate Professor, Phd, Copenhagen Business School, Denmark;
Panagiotis Kontakos Assist. Prof. in International Business & Entrepreneurship, UCLan Cyprus University, Cyprus;
Sahure Gonca Telli Prof. Dr., Dean Faculty of Economics and Administrative Sciences Dogus University, Turkey;
Mustafa Erdogdu Professor of Department of Public Finance, Marmara University Faculty of Economics, Turkey;
Mariam Arpentieva Grand Dr. of Psychological Sciences, Assoc. Prof., Tsiolkovskiy Kaluga State University, Russia;
Radmila Pidlypna Dr. of Sciences, Professor, UTEI Kyiv National University of Trade and Economics, Ukraine;
Andrii Nikitin PhD, Assoc. Prof., Kyiv National Economic University named after Vadym Hetman, Ukraine;
Galina Yasheva Doctor of Economics, Professor, Vitebsk State Technological University, Belarus;
Liudmila Bagdonienė Litva;
Hans van Meerten Netherlands;
Reinhard Magenreuter Germany.
4. VUZF review, № 6(3) – 2021 ISSN 2534-9228
CONTENT
1 Windfall profits and losses caused by the COVID-19 pandemic
Irena Brukwicka, Iwona Dudzik …………….….……………………..………………….…….. 5
2 The establishment of the inflation target and the corridor of fluctuations of
the target: analysis of world trends and practice in Ukraine
Vitaliy Shapran, Igor Britchenko ……………………………………………………………………………………… 13
3 Improving financial literacy of a selected group in favour of eliminating
crime
Jozefína Drotárová, Andzej Misiuk, Zuzana Gedeonová …………………………………………………… 20
4 Methodology for assessment of food security of countries
Robert Jurczak …………………………………………………………………………………………………………………. 30
5 Theoretical aspect of marketing research of the market and its elements
Olha Matviiets, Diana Korpan ..………………………………………………………………………………………… 37
6 Principles, assessment and methods of risk management of investment
activities of the enterprise
Kateryna Kraus, Nataliia Kraus, Galyna Pochenchuk ………………………………………………………... 45
7 Human resource management in the contemporary enterprises
Beata Małgorzata Kudła ………………………………………………………………………………………………….. 59
8 Role of social sphere in ensuring quality of working life
Volodymyr Kyryliuk, Ivan Ryabokon ………………………………………………………………………………… 66
9 Authenticity of brands in the marketing commodity policy of the enterprise
Maryna Kirnosova …………………………………………………………………………………………………………… 78
10 Financial technologies for bank financial stability management in
economical turbulence conditions
Maksim Babenko …………………………………………………………………………………………………………….. 90
11 Assessing the impact of globalization on stock market in Ukraine
Tetyana Zadorozhna ……………………………………………………………………………………………………….. 100
12 Structural and regional characteristics of the world retail trade leaders
Olha Kavun-Moshkovska …………………………………………………………………………………………………. 108
13 Causes and effects of inflation in Poland
Irena Brukwicka, Iwona Dudzik ……………………………………………………………………………………….. 119
14 Managing small and medium-sized enterprises in the time of crisis
Waldemar Piotr Włoch ……………………………………………………………………………………………………. 126
15 Public-private partnership as a mechanism for effective management of
state property
Chepelenko Anzhelika ……………………………………………………………………………………………………… 133
5. VUZF review, № 6(3) – 2021 ISSN 2534-9228
16 Methodical approaches to evaluation of intellectual capital of enterprises
Iryna Yepifanova, Diana Hladka ……………………………………………………………………………………… 145
17 The essence of the logistics activities of the enterprise in modern business
conditions
Halyna Savina, Yuriy Dusheiko, Anastasiia Rozova ………………………………………………………….. 154
18 Food aid in Poland in the years 2014-2019 as an expression of solidarity and
European Union support for the national social assistance system
Piotr Frączek …………………………………………………………………………………………………………………… 167
19 Economic mechanism of urban passenger transport’s sustainable
development
Marharyta Bohachenko, Liubov Niekrasova …………………………………………………………………….. 177
20 Ensuring the financial safety of Ukrainian agricultural enterprises in the
context of export products and the impact on macroeconomic indicators
Maksym Bezpartochnyi, Igor Britchenko, Olesia Bezpartochna…………………………………………. 186
6. ISSN 2534-9228 (2021) VUZF review, 6(3)
Windfall profits and losses caused by the COVID-19 pandemic
Irena Brukwicka* А
; Iwona Dudzik B
A, B Bronisław Markiewicz State Higher School of Technology and Economics in Jarosław, Czarnieckiego str. 16, Jarosław, 37-500 Poland
Received: July 11, 2021 | Revised: July 28, 2021 | Accepted: August 18, 2021
JEL Classification: D12, D22, F23, G51.
DOI: 10.38188/2534-9228.21.3.01
Abstract
The outbreak of COVID-19 pandemic is a great economic shock, both for the European countries
and for the entire world. The subject of the study is the unexpected profits or losses connected
with the coronavirus pandemic. The authors of the article focus on the areas affected by losses
and the areas, which achieved windfall profits during the discussed period. The purpose of this
article is to analyze and evaluate the profits and losses resulting from the ongoing SARS-CoV-2
pandemic. The world economy has been struggling with epidemic phenomena, varying in
intensity and extent, since at least the Roman Empire. This is also the case when the global
economy is affected by the pandemic. The business environment has radically evolved. The
pandemic contributed to losses in many areas, the most influenced fields are the following:
aviation, hospitality and tourism. Profits, on the other hand, relate to the Zoom company, which
enables and facilitates videoconferencing, it is so important in the case of remote work. Online
shops, such as Amazon, have also recorded an increase, especially during the closure of brick
and mortar shops. Stock market increases were also observed among companies supplying food
and food products. It should be emphasized, however, that the financial situation of individual
companies also depends on the principals and permanent contracts.
Keywords: crisis, pandemic, collapse, economy, industry, COVID-19 pandemic.
Introduction
The global reality is constantly changing,
causing functioning in different conditions.
Uncertainty is one of the consequences of a
pandemic, which is also associated (apart from
discomfort) with the abandonment of
entrepreneurial activities, and thus, with taking
conservative decisions. (A. Dolot, 2020). With
regard to the number of cases, global scope or
time of occurrence, the COVID-19 pandemic
appears to be much more severe and endless
than the epidemics in the 19th or 20th century.
It seems that the economic consequences of
today’s pandemic may be underestimated due
to globalization. (Ł. Ambroziak and others,
2020).
Material and methods
In the study it is used the method of
observation, including the method of statistical
analysis.
The COVID-19 epidemic began in November
2019. Although, it was initially predicted that
some parts of China and Asia would be affected,
the spread of the virus has increased over time.
* Corresponding author:
А PhD, adjunct, The Bronisław Markiewicz State Higher School of Technology and Economics in Jarosław, e-mail: brukwicka.irena@op.pl
B
PhD, adjunct, The Bronisław Markiewicz State Higher School of Technology and Economics in Jarosław, e-mail: iwona.dudzik@op.pl
March 11, 2020 the World Health Organization
declared the COVID-19 epidemic to be a
pandemic. In Poland, the first case of COVID-19
was confirmed on March 4, 2020 (A. Dolot,
2020).
The chart below shows the loss of revenues
in the transport sector in the first half of 2020
5
7. ISSN 2534-9228 (2021) VUZF review, 6(3)
during the coronavirus pandemic.
Chart 1. Revenues loss in the transport sector
(freight transport) in the first half of 2020
Source: A. Pomykała, Commodity sector during the
period of dealing with the effects of Covid-19, „TTS
Rail Transport Technology” 2020, No 27, p. 16-19.
Initially, the sea cargo transport was
decreasing, followed by the decrease in the
number of road freight forwarding and rail freight
(also intermodal transport) (M. Koralewski, 2020).
Transport is an area of the economy that is
extremely important in the period of the crisis
related to the effects of COVID-19. It is worth
noting that the situation of freight carriers is
varied, which results mainly from the structure of
the portfolio in terms of permanent contracts, as
well as from the condition of customers. The
situation of freight carriers is also influenced by
the prospect of increased economic activity over
the next few weeks (M. Koralewski, 2020).
The crisis and pandemic losses have not only
affected the freight transport sector.Air transport,
including our national carriers, also recorded a
deficit. At the early stage of the COVID-19
outbreak, carriers transported people who were
returning to the country. The aviation industry has
almost come to a halt. Losses in the case of Polish
air carriers can be observed on the basis of the
stock chart presented below.
Chart 2. LOT – stock market chart, 2018-2021
Source: Financial services, stooq.pl
[Access: 24.03.2021.]
At the same time, it is worth pointing out that
the aviation industry in Asia is returning to its
initial level which was before the outbreak of the
pandemic (M. Koralewski, 2020).
As it can be seen from the stock chart during
the COVID-19 pandemic, the stock quotes of the
LOT air carrier have dropped drastically.
When analyzing the profits related to the
COVID-19 pandemic, one should take into
account the Zoom company. Zoom’s share price
rose from nearly $ 60 to $ 570. However, in the
third quarter of 2020, revenues increased by
367%, thus, net profit increased by 1079%. At
the same time, however, the position of Zoom
increased its sensitivity to signals coming from
the market. The situation is illustrated by the
Zoom stock chart showing the company’s results
in 2019-2021. (investing.com, 2021).
Chart 3. Zoom stock quotations market in 2019-
2021
Source: Financial services, stooq.pl
[Access: 24.03.2021.]
However, many people use the Zoom
platform free of charge and it may lower the
gross margin. It has been observed for the last
few months. It is indicated nowadays that Zoom
has nearly 433,000 customers who employ more
than 10 employees. It constitutes an increase of
approx. 485%, compared to the year preceding
the COVID-19 pandemic. Zoom’s competitor is
Microsoft company, which offers the Teams
platform, as well as Cisco, which offers the
Webex platform (K. Bogacki, 2021).
As it was mentioned, the passenger transport
sector experienced significant negative effects
The rest
54%
Europe
36%
Asia
10%
6
8. ISSN 2534-9228 (2021) VUZF review, 6(3)
during the first lockdown. Nevertheless,
significant profits have been observed for the
food delivery. In the third quarter of 2020, there
was an increase of 190% compared to the
previous year, thus revenues constituted 1.14
billion dollars (Financial Services, 2021).
The chart below shows the Uber’s stock
prices in 2019-2021. In 2020, almost from the
beginning of the COVID-19 pandemic, it has
been observed a steady and significant increase.
Chart 4. Uber stock-exchange price in 2019-
2021
Source: Financial services, stooq.pl
[Access: 24.03.2021.]
The Uber’s competitor is Lyft company, which
recorded the similar growth during the
pandemic. Lyft stock exchange price is
presented in the chart below (Financial services,
2021).
Chart 5. Lyft stock exchange price in 2019-2021
Source: Financial services, stooq.pl
[Access: 24.03.2021.]
Each of these companies reacted to market
information following the Pfizer company
announcement regarding the completion of
works on the vaccine. This was only a temporary
reaction, as they returned to the increase, as a
service sector plays an important role in the
global vaccination (Financial Service, 2021).
Amazon company has also recorded an
increase in profits. It is an American trading
company, operating in the form of a joint stock
company that was founded in Seattle in 1994.
Amazon deals with B2C e-commerce and runs an
online store, which is considered the largest in
the world (J. Kopeć et al., 2021).
Undoubtedly, it can be observed that traders
recorded significant profits during the COVID-19
pandemic. The longer brick-and-mortar stores
were closed, the greater were growth shares of
such companies, as Zalando and Amazon. The
pandemic outbreak was beneficial for online
trading companies. At the very beginning of the
economic shock, their shares went up. The
longer the brick-and-mortar stores were closed,
the more they increased.
Chart 6. Amazon stock exchange quotations in
2018-2021
Source: Financial services, stooq.pl
[Access: 24.03.2021.]
In addition to the above profits, many
industries experienced significant losses
because of the COVID-19 pandemic. Hospitality
is one of the industries that was significantly
affected by the coronavirus. The Marriott
International chain, which is the largest luxury
hotel chain in the world, can serve as an
example. Marriott’s stock market has still not
recovered to pre-coronavirus level. The
7
9. ISSN 2534-9228 (2021) VUZF review, 6(3)
situation was not also improved when the
restrictions started to be gradually lifted, as
people travelled less during summer holidays (J.
Kopeć et al., 2021), in comparison to the
previous year. The Marriott stock chart is
presented below.
Chart 7. Marriott stock chart in 2018-2021
Source: Financial services, stooq.pl
[Access: 24.03.2021.]
In the early months of the COVID-19
pandemic, hotels were lowering prices. But
Airbnb company, on the contrary, did not lower
the prices, but even increased them in many
cities (e.g. in Venice). (J. Kopeć and others,
2021).
Tourism companies have also reported
losses. An example of such company is TUI, but
its financial results were still unsatisfactory
before the COVID-19 pandemic. TUI’s debt in
September 2020 amounted to nearly EUR 4.2
billion. TUI’s revenues decreased by approx.
58% at that period, which resulted in loss of EUR
3.2 billion. (ttg.com.pl, 2021).
The situation of the households and their
impact on the economies of individual countries
also seem to be of great importance. The first
results of the study on this phenomenon show
that the number of people working remotely has
increased by 100% since the pandemic. At the
same time, people missed the daily social
interactions and had a fear of social isolation.
Although remote work quite efficiently
reconciles work and private duties, it also blurs
the line between work and intimate life (J.K.
Solarz, 2020). In addition, the household budget
study from 2018 showed that about 330
thousand student accommodation did not have
a computer with Internet access, and 1,320
thousand had less than one computer. This
indicates the scale of educational exclusion at
the level of over 1.65 million, that is over 35% of
all students in Poland (J.K. Solarz, 2020).
Chart 8. The possibility of maintaining the
household budget until financial problems
arise
Source: Coronavirus throws people out of work,
2020 [Access 19.06.2021.]
Almost every fifth respondent said that
he/she has accumulated funds for a maximum
of one or two months. The number of the
respondents, who said that their savings would
allow them to live for three months was
comparable. People who did not have any
resources for living were the most concerned
about financial resources, because they spent all
their monthly salary and ran out of money
(Chart 8).
The data analysis shows that the pandemic
has led to a critical global recession. The first
quarter of 2021 is recessionary and the same
predictions are for the second one, perhaps the
second half of the year will show an accelerated
pace.
In case the pandemic will be brought under
control, national economies of some countries
will flourish, but there is little chance of a rapid
V-shape revival. It seems necessary to take
measures to neutralize global disruptions in
international trade, such as the abolition of
customs duties introduced by the US or China,
as well as consistent liberalization of trade.
It may seem interesting from an economic
point of view that the probability of a deep
stagnation in Poland is considered to be lower.
Explaining their point of view, the analysts
8
10. ISSN 2534-9228 (2021) VUZF review, 6(3)
emphasize that compared to German economy,
Poland is less dependent on export, it has a
loose economic connection with China, the
tourism and entertainment sector do not have
such a significant share in GDP, in comparison to
European countries. Moreover, Polish economy
is very heterogeneous. According to analysts,
faster economic growth in Poland compared to
Germany or other Western countries seems to
be an additional economy impact factor, and
this is a kind of protection against the possible
stagnation.
The forecasts of the European Commission
and International Monetary Fund of 2020
assume great economic growth in 2021 in the EU
countries. As for Poland, the forecasts are
slightly weaker, and according to these
forecasts, we may be one of the least affected
by COVID-19 countries in Europe, together with
Ireland and Lithuania. The European
Commission expects Polish GDP to be slightly
below the level from 2019 (-0.2%). The
International Monetary Fund estimated data for
Poland (from November) within Article IV
consultation and forecasts a decrease of 0.8%
compared to 2019. This estimation also
coincides with the OECD (Organization for
Economic Cooperation and Development)
forecast for December and predicts that in 2021
Poland’s GDP will be 0.7% lower than in 2019.
According to the available data, the impact on
the economy of the second wave may be weaker
than that of the first wave. The prolonged
difficulties in the economy may result in a delay
in economic recovery. Additionally, the further
aid instruments for industries announced with
the extension of the restrictions may
significantly strain the previous forecasts (A.
Łaszek et al., 2021), (A. Sieroń, 2020).
Despite the relatively great reduction of gap
in relation to the world’s leading economies, in
the projections of the European Commission or
OECD estimates, Poland remains an
undercapitalized country, in comparison to
other countries. Even the rapid economic
growth has not improved the situation of
Poland. It was in the eighth place from the end
among the 27 countries of the European Union
in 2019. Bulgaria, Croatia, Romania, Greece,
Latvia, Slovakia and Hungary turned out to be
poorer (A. Łaszek et al., 2021).
Results and discussion
The global SARS-CoV-2 pandemic, which has
affected the whole world, is an unusual and,
unfortunately, a negative phenomenon. It
resulted in decline in GDP and in a foreign trade
exchange, confusion on stock and commodity
exchanges, freezing of labor markets, damaging
tourism, gastronomy and hotel industries, as
well as media, entertainment, sports and
recreation market. The predictions that are
slowly coming true indicate that GDP in 2020
and 2021 is lower than that in 2019, and this
may result in a recession in the global economy.
Its reconstruction will be a long and multi-staged
process, and it will be influenced by the mutant
virus and by economies of the following
countries on the world map: China, the USA or
the EU (M. Antonowicz, 2020), (Polish Chamber
of Statutory Auditors, 2020).
Undoubtedly, since the outbreak of the
COVID-19 pandemic, the countries all over the
world have been forced to comply with many
restrictions imposed by the authorities. A
significant number of people were deprived of
previous sources of income. The priorities of the
consumers themselves have also changed.
Summing up the considerations undertaken in
this paper, a sudden decline can be observed in
the tourism industry, as well as among
manufacturers of travel accessories, such as
suitcases. The introduced restrictions have also
resulted in the decrease in sales - fashion
business and wedding fashion sectors, and the
demand for wedding dresses, party dresses and
suits was also lower because of cancellation of
special events (A. Załęska, 2021), (J. Kopeć et al.,
2021).
The sales of enterprises, which were not
focused on online sales, have also declined. It
has led to closure of brick-and-mortar stores. As
consumers are deeply concern about the impact
9
11. ISSN 2534-9228 (2021) VUZF review, 6(3)
of COVID-19, they are less interested in
purchasing the items in shops (A. Załęska, 2021).
Thus, it should be emphasized once again
that the decrease in income of the companies is
influenced by portfolio of regular customers, as
well as by financial ability of contractors and
employers. Although it was extremely difficult
to predict the outbreak of the COVID-19
pandemic, one should create a specific security
facility when running a business (regardless of
the industry) and determine the procedures to
be followed during a crisis. Nearly each type of
industry has been affected by pandemic to a
greater or lesser extent. It should be
remembered, however, that regardless of the
main goal of the enterprise, one cannot ignore
the signals of the crisis, take ineffective
measures, make wrong choices and have no
flexibility in actions. If the company has
adequate human resources, it would be
beneficial to create a crisis team, including
employees who are responsible for the basic
processes in the company (E. Rutkowski, 2021).
It goes without saying that the spread of the
virus itself, as well as restrictions on the
movement of people caused a kind of economic
shock.
The pandemic has affected the economy in
two ways. Consumption during the lock down
periods shrinks, because people either get sick,
or make efforts to protect themselves from
infection. Under the influence of media reports
or conversations with each other, citizens who
are negatively prejudiced against
hospitalization, self-quarantine without being
tested and getting confirmation of the disease.
They prefer to stay at home in any case. It results
in abandoning their potential travels for various
purposes (including tourism) or visiting
shopping centers, which in recent years have
actually become places of spending their free
time. Tourism, transport, catering, leisure and
entertainment industries were severely affected
by the pandemic in a relatively short time. The
best example of the demand effect is the fall in
demand for crude oil (less demand, for example,
for transport services) and the fall in price. It
turned out unexpectedly that for the first time
in the history of crude oil trading, the price of a
barrel in transactions with a load date for May
2020 in the USA turned negative (M.
Antonowicz, 2020), (B. Hadasik, 2021).
The algorithms, intentions or premises,
which were successfully used in the past, are
unlikely to work. In order to get the pre-collapse
state, the giant corporations, as well as small
companies and businesses have to act quickly.
Surely, one should take into account such
obstacles as legal acts and regulations that are
subject to systematic changes, depending on the
adopted policy of a particular country, unstable
distribution, negative emotional states of
people or changes in consumer behavior with a
tendency to limit spending money. The
determined business owners who are interested
in the stabilization process should focus on
action-oriented strategy, including four
elements:
1. Setting specific organizational goals, that is
specifying common approaches to functioning
enterprise in the “normal” operative mode, and
fulfillment of immediate actions that will
accelerate the entire operation.
2. Prognostication of effects that define the
stakeholders’ expectations.
3. Focus on efficient temporary solutions.
4. Skilful time disposal and deliberate choice
of the right time to start a business.
(deloitte.com/pl, 2021).
Many Western companies are aiming at
diversification of their sources of partner
supplies, marginalizing China’s “mission” as a
“global conglomerate”. This may lead to
reshoring of production to Western countries,
that is Europe, the USA / Canada.
Reshoring the supply chains is an idea that
coincides with the emergence of globalization,
and in the context of the pandemic, it has
become very popular due to the widespread
opinion that the more articles, goods or
products are produced at the local level, the
better the economy will be. (Z. Bentyn, 2015).
The World Bank breaks down the costs of a
pandemic into three categories: 12% of total
10
12. ISSN 2534-9228 (2021) VUZF review, 6(3)
costs is connected with mortality, 28% is caused
by absenteeism, and unfortunately, 60% is
caused by behavior (fear and avoidance of
contagion). The above figures make you think
that the COVID-19 pandemic does not need to
have the characteristics of a ruthless killer with
a high death rate like Ebola, Marburg, HIV, SARS
in order to be economically expensive (A. Sieroń,
2020).
Conclusions
1. An important consequence of the epidemic
from an economic point of view is a negative
supply shock. All cataclysms that the current
pandemic involves lead to decline in the supply
of labor force. It is a temporary phenomenon. It
is influenced by illness of the employees or their
forced quarantine. The decrease in production,
existence of fixed costs, the need to maintain an
employee (salaries, insurance) send countries
into a kind of debt spiral. As a result, liquidity
problems arise and the risk of bankruptcy
increases significantly.
2. In the present epidemiological impasse, it
seems important to protect sectors of strategic
significance for individual economies, as well as
assets, technologies and infrastructures, and
above all, to focus on protection of employees
and their jobs.
3. The enormous costs and expenditures
incurred by states to overcome the COVID-19
pandemic illustrate, in a sense, the benefits:
human life has become the most important
value; the economic growth of individual EU
Member States has generated assets for
mitigating actions, even as drastic as the
quarantine of entire regions, individual sectors
and industries; it enables “existence” of
business under shared management by
providing ongoing liquidity to companies that
have been affected by the crisis.
4. The pandemic shows that making savings
is very important nowadays (private and public)
for rainy days. The pandemic should also make
people and businesses aware of the need to
diversify. It goes here about sources of income
and supply. The problem of many companies
was the fact that they were relying on one Asian
sub-tier supplier.
5. Economic impasse gives no quarter for
many syndicates, corporations, companies,
individual or group business activities; despite
everything, there are branches to which the
reduced tariffs are applied; in some situations,
the pandemic rushes and initiates innovative,
unusual solutions; following trading profit
analysis, one can see which companies are
making money from the pandemic; there is
troublesome and risky deduction for which
businesses are only periodic fluctuations in
demand, and not permanent changes; in the
future one can see which of the companies will
adequately take into account the present
situation and turn failures into success.
References
Ambroziak Ł., Chojna J., Gniadek J., Kępka H.,
Strzelecki J., Trade routes after a pandemic
COVID-19, Polish Economic Institute
Publishing House, Warsaw 2020, p. 4.
Antonowicz M., Intermodal transport in times of
pandemics sars-cov-2. First special report of
the portal INTERMODALNEWS.PL, Publisher
IntermodalNews.pl, Wroclaw 2020, p. 6.
Bentyn Z., Reshoring strategy as a factor shaping
global supply chains. Logistics, 2015, No 3, CD
1 | 313-320.
Bogacki K., Does Zoom only grow during a
pandemic? Available from:
https://itreseller.com.pl/czy-zoom-
wylacznie-rosnie-podczas-pandemii-okazuje-
sie-ze-tworcy-narzedzia-do-
wideokonferencji-rejestruja-coraz-nizsza-
marze/ [ Access: 23.03.2021.]
Dolot A., The impact of the COVID-19 pandemic
on remote working – an employee's
perspective, "E-mentor" 2020, No 1.
Tui Group will receive further support from the
11
13. ISSN 2534-9228 (2021) VUZF review, 6(3)
German government. Available from:
http://ttg.com.pl/grupa-tui-otrzyma-kolejne-
wsparcie-od-rzadu-niemiec/ [Access:
23.03.2021.]
Hadasik B., Macroeconomic analysis of the E-
Commerce sector in the face of a covid-19
pandemic using the Pest/Pestel method. Available
from: Widening Horizons – Tom XX, cz. I, p. 64-71
https://www.researchgate.net/publication/3489
07818 [Access: 23.03.2021.]; https://pl.grupa
tuisting.com/equities/zoom-video-
communications [Access: 3.03.2021.];
https://pl.investing.com/equities/zoom-video-
communications [Access: 23.03.2021.];
ttps://www2.deloitte.com/pl/pl/pages/human-
capital/articles/jak-zachowac-odpornosc-w-
biznesie-powrot-do-normalnego-dzialania-po-
pandemii.html [Access: 17.04.2021.]; Kopeć J.,
Makarenko V., Korzeniowska K., Who the
pandemic has made money for and who is
happy to hear about the vaccine. BIQDATA,
Available from: https://biqdata.wyborcza.pl/
biqdata/7,159116,26609909,komu-pandemia-
dala-zarobic-a-kto-sie-cieszy-na-wiesc-o-
szczepionce.html [Access: 16.12.2021.]
Koralewski M., Logistics and mobility during the
COVID-19 pandemic, "Expertise" 2020, No4,
p. 3-4.
Łaszek A., Trzeciakowski R., Zieliński M., Poland,
Stagnation or growth? Work, rule of law,
investments, innovations. Report under the
expert direction of L. Balcerowicz, FOR
Warsaw, 2021, p. 54-56.
Pomykała A., Commodity sector during the
period of dealing with the effects of Covid
“TTS Rail Transport Technology” 2020, No 27, p.
16-19.
Rutkowski E., COVID-19: how to survive a crisis?
Fundamentals of strategic management in a
company during a crisis, Available from:
https://www.parp.gov.pl/component/conte
nt/article/59299:covid-19-jak-przetrwac-
kryzys-podstawy-zarzadzania-
strategicznego-w-przedsiebiorstwie-w-
czasie-kryzysu [Access: 25.03.2021.]
Serwis finansowy, Available from:
http://www.stooq.pl [Access: 24.03.2021.]
Sieroń A., Will the covid-19 pandemic cause the
global economy to collapse. University
Review on-line. University of Wrocław
[Access: 22.06.2021.]
Solarz J. K., Waliszewski K., Pandemic or
generational war? Finance and financial
law. Journal of Finance and Financial Law
June 2020, vol. 2(26), p. 105.
Impact of the SARS-Cov-2 coronavirus
pandemic on the 2019 audit. Polish
Chamber of Statutory Auditors, Warsaw
2020, p. 2.
Załęska A., What impact does coronavirus have
on e-commerce. Available from:
https://invette.pl/blog/wplyw-
koronawirusa-na-e-commerce/ [Access:
24.03.2021.].
12
14. ISSN 2534-9228 (2021) VUZF review, 6(3)
The establishment of the inflation target and the corridor of
fluctuations of the target: analysis of world trends and practice
in Ukraine
Vitaliy Shapran * А
; Igor BritchenkoB
A
National Bank of Ukraine, Instytutska St, 9, Kyiv, 01601, Ukraine
B VUZF University, 1, Gusla str., Sofia, 1618, Bulgaria
Received: July 10, 2021 | Revised: August 14, 2021 | Accepted: September 28, 2021
JEL Classification: E.31, E.32, E.52, E.58.
DOI: 10.38188/2534-9228.21.3.02
Abstract
The article presents an analysis of global trends in setting the inflation target and the
acceptable corridor of inflation target fluctuations. Inflation targeting is an important
attribute of the monetary regime of inflation targeting, its main quantitative
parameter. The tendency of the inflation targeting regime in 70 countries all over the
world are considered, of which 41 countries have official recognition by the
International Monetary Fund (IMF) regarding the inflation targeting regime. It was
found that most countries set the inflation target at 5% or below, and the level of
the corridor of fluctuations in relative terms hovers around 20-50% of the target
value. The latest trends related to changes in the monetary policy of the European
Central Bank have been studied, recommendations for determining the acceptable
corridor of fluctuations of the inflation target in small and open economies on the
example of Ukraine are provided.
Keywords: inflation, inflation target, monetary policy, development markets, monetary
transmission, prime rates, credit markets, monetary regime.
Introduction
Nowadays, the monetary regime of the
inflation targeting is one of the most popular
in the world. National legislation entrusts the
central bank with the function of maintaining
price stability in many countries. The
economic growth and support of full
employment are sometimes added to the
central bank's functions. But it’s that model
that’s gaining popularity, in which maintaining
price stability in cooperation with the
government, which is responsible for
economic growth, especially among central
banks that are not issuers of world reserve
currencies. By setting an inflation target, the
* Corresponding author:
A Professor, Ph.D. in Economics, Member of the National bank of Ukraine Council, e-mail: shapranv@gmail.com, ORCID: 0000-0002-1540-6834
B
Dr. of Sciences, Professor Higher School of Insurance and Finance, e-mail: ibritchenko@gmail.com, ORCID: 0000-0002-9196-8740
central bank communicates with the market
by signaling what inflation rate it wants to see
in the future. The actual inflation rate may
deviate from the target and the corridor of
fluctuation, but, as a rule, in the medium term,
the inflation rate should approach the target
by entering the corridor. One of the main ideas
of the inflation targeting is to influence
inflationary expectations of the population
and business through the communication with
the market by the central bank. But the
question arises: what should be the inflation
target and the corridor of fluctuations of this
target, so that communication tools can best
13
15. ISSN 2534-9228 (2021) VUZF review, 6(3)
influence the expectations of the population
and business. The second important issue is
the availability and quality of communication
tools of the central bank, able to ensure the
delivery of the necessary information to the
target audience.
Material and methods
During the study, we used methods:
comparison, historical comparison, analogy,
historical analogy. Data of 70 countries which
are setting inflation targets were processed, of
which the IMF recognized 41 countries with
the “inflation targeting” monetary regime. The
comparison was partly based on the type of
the country's market: developed or
developing. The comparison took into account
that, for example, Ukraine belongs to the small
open economies, which has a strong
dependence on commodity export prices. The
source of the analyzed statistics were central
banks, according to news agencies.
A practical example of Ukraine
From 5 calendar years, while in Ukraine
operated inflation targeting, inflation did not
fall into the corridor of fluctuations for 2 years:
in 2017 and in 2018. Most likely, inflation will
not fall into the corridor of fluctuations
already in the end of 2021 year:
2015 year – actual inflation - 43,3% - target
– no data
2016 year – actual inflation - 12,4% - target
– 12,0% +/-3,0%
2017 year – actual inflation – 13,7% –
target – 8,0% +/- 2,0%
2018 year – actual inflation – 9,8% – target
– 6,0% +/- 2,0%
2019 year – actual inflation - 4,1% - target –
5,0% +/- 1,0%
2020 year – actual inflation - 5,0% - target –
5,0% +/- 1,0%
2021 year – actual inflation – 6,5% for 7
months – target – 5,0% +/-1,0%
Quite frequent failure to hit the target and
the allowable range for inflation targeting
does not add confidence to the inflation target
of the NBU. At the same time, it would be fair
to assume that the non-targeting of consumer
inflation in Ukraine is usually due to force
majeure circumstances that do not depend on
the monetary component. Although the
effectiveness of the monetary regime of
inflation targeting since 2015 has been proven
by the practice of low inflation in 2019-2020,
it must be acknowledged that Ukraine
continues to be a country:
- With a small, open and raw materials
economy, where the risk of external
shocks in the domestic market is greater
than in most countries with developed
domestic markets. The current level of
development of the structure of sectoral
markets and tools for monetary policy,
available to the NBU, reduces the
likelihood of successful resistance to
external shocks;
- With a fairly underdeveloped financial
market, where the forward market is just
beginning to take shape, and some of its
segments (including securitized assets)
are absent, which reduces the efficiency
of monetary transmission and limits the
use of the central bank discount rate as
the main instrument of monetary policy.
Two factors point to the need to widen the
corridor of fluctuations in the inflation target
in the light of current global trends, especially
in countries where the International Monetary
Fund (IMF) has recognized inflation targeting
as the official monetary regime.
Global trends in the establishment of a
fluctuations corridor in the inflation target
Monitoring of data on the dynamics of the
target by central banks showed that in 2021,
compared with 2020, of the 41 countries in
which the inflation targeting regime is
recognized by the IMF, 3 countries have
reduced the inflation target: Brazil (from 4.0%
to 3.75%), Indonesia (from 3.5% to 3.0%) and
Thailand (from 2.5% to 2.0%). The increasing
in the inflation target was not recorded, as a
year ago. It is important to note that Brazil in
2019 had an inflation target of 4.25%, ie we
observe for 2 consecutive years a decrease in
14
16. ISSN 2534-9228 (2021) VUZF review, 6(3)
this indicator in Brazil, which, incidentally, has
suffered quite a lot from the COVID-19
recession (table 1).
It should be noted (table 1) that as of early
August, a number of countries in which the
inflation targeting (IT) regime was recognized
by the IMF, had the opportunity to support
inflation more than in Ukraine: Ghana (10%),
Moldova (6, 5%), Turkey (7%), Uganda (7%)
Uruguay (7%). Of the 30 countries that
declared their commitment to the inflation
targeting regime, the target was higher in such
countries as Egypt (9%), Kyrgyzstan (7%),
Nigeria (9%), Mongolia (8%) and Tajikistan
(9%), Rwanda (8%), Zambia (8%) than in
Ukraine. That is, the upper limit of the inflation
target range in Ukraine was at a level that was
far from “world records” compared to other
countries, and could be increased to 7-8%.
Table 1. Inflation target in 2020-2021, data for July 12, 2021
COUNTRY 2021 Relative deviation 2020 Relative deviation
ALBANIA 3.00% +/-1% 33,3% 3.00% +/-1% 33,3%
ARMENIA 4.00% +/-1.5% 37,5% 4.00% +/-1.5% 37,5%
AUSTRALIA 2.00% - 3.00% 20,0% 2.00% - 3.00% 20,0%
AZERBAIJAN 4.00% +/-2.0% 50,0% 4.00% +/-2.0% 50,0%
BOTSWANA 3.00% - 6.00% 33,3% 3.00% - 6.00% 33,3%
BRAZIL* 3.75% +/-1.5% 40,0% 4.00% +/-1.5% 37,5%
CANADA 2.00% +/-1.0% 50,0% 2.00% +/-1.0% 50,0%
CHILE 3.00% +/-1.0% 33,3% 3.00% +/-1.0% 33,3%
CHINA around 3.00% - around 3.00% -
COLOMBIA 3.00% +/-1.0% 33,3% 3.00% +/-1.0% 33,3%
DEM. REP. CONGO 7.00% - 7.00% -
COSTA RICA 3.00% +/-1.0% 33,3% 3.00% +/-1.0% 33,3%
CZECH REPUBLIC 2.00% +/-1.0% 50,0% 2.00% +/-1.0% 50,0%
DOMINICAN REP. 4.00% +/-1% 25,0% 4.00% +/-1% 25,0%
EGYPT* 7.00% +/-2% 28,6% 9.0% +/-3% 33,3%
ESWATINI 3.00% - 7.00% 40,0% 3.00% - 7.00% 40,0%
EURO AREA* 2.00% - <2.00% -
GAMBIA 5.00% - 5.00% -
GEORGIA 3.00% - 3.00% -
GHANA 8.00% +/-2.0% 25,0% 8.00% +/-2.0% 25,0%
GUATEMALA 4.00% +/-1.0% 25,0% 4.00% +/-1.0% 25,0%
HUNGARY 3.00% +/-1.0% 33,3% 3.00% +/-1.0% 33,3%
HONDURAS 4.00%+/-1.0% 25,0% 4.00%+/-1.0% 25,0%
ICELAND 2.50% - 2.50% -
INDIA 4.00% +/-2.0% 50,0% 4.00% +/-2.0% 50,0%
INDONESIA * 3.00% +/-1.0% 33,3% 3.50% +/-1.0% 28,6%
ISRAEL 1.00% - 3.00% 50,0% 1.00% - 3.00% 50,0%
JAMAICA 4.0%-6.0% 20,0% 4.0%-6.0% 20,0%
JAPAN 2.00% - 2.00% -
KAZAKHSTAN 4.00%-6.00% 20,0% 4.00%-6.00% 20,0%
KENYA 5.00% +/-2.50% 50,0% 5.00% +/-2.50% 50,0%
KYRGYZSTAN 5.00%-7.00% 16,7% 5.00%-7.00% 16,7%
MALAWI 5.00% - 5.00% -
MEXICO 3.00% +/-1.0% 33,3% 3.00% +/-1.0% 33,3%
MOLDOVA 5.00% +/-1.5% 30,0% 5.00% +/-1.5% 30,0%
15
17. ISSN 2534-9228 (2021) VUZF review, 6(3)
COUNTRY 2021 Relative deviation 2020 Relative deviation
MONGOLIA* 6.00% +/-2% 33,3% <8.00% +/-2% 25,0%
MOZAMBIQUE 5.60% - 5.60% -
NEPAL 6.00% - 6.00% -
NEW ZEALAND 2.00% +/-1.0% 50,0% 2.00% +/-1.0% 50,0%
NIGERIA 6.00% - 9.00% 20,0% 6.00% - 9.00% 20,0%
NORWAY 2.00% - 2.00% -
PAKISTAN 6.00% - 6.00% -
PARAGUAY 4.00% +/-2.0% 50,0% 4.00% +/-2.0% 50,0%
PERU 2.00% +/-1% 50,0% 2.00% +/-1% 50,0%
PHILIPPINES 3.00% +/- 1.0 33,3% 3.00% +/- 1.0 33,3%
POLAND 2.50% +/-1.0% 40,0% 2.50% +/-1.0% 40,0%
ROMANIA 2.50% +/-1.0% 40,0% 2.50% +/-1.0% 40,0%
RUSSIA 4.00% - 4.00% -
RWANDA 5.00% +/-3% 60,0% 5.00% +/-3% 60,0%
SAMOA 3.00% - 3.00% -
SERBIA 3.00% +/-1.5% 50,0% 3.00% +/-1.5% 50,0%
SOUTH AFRICA 3.00% - 6.0% 33,3% 3.00% - 6.0% 33,3%
SOUTH KOREA 2.00% - 2.00% -
SRI LANKA 4.00% - 6.00% 20,0% 4.00% - 6.00% 20,0%
SWEDEN 2.00% - 2.00% -
SWITZERLAND <2.00% - <2.00% -
TAJIKISTAN 7.0% +/-2.0% 28,57% 7.0% +/-2.0% 28,57%
TANZANIA 5.00% - 5.00% -
THAILAND* 1.00% - 3.00% 50,0% 2.50% +/-1.5% 50,0%
TONGA 5.00% - 5.00% -
TURKEY 5.00% +/-2% 40,0% 5.00% +/-2% 40,0%
UGANDA 5.00% +/-2.0% 40,0% 5.00% +/-2.0% 40,0%
UKRAINE 5.00 +/- 1% 20,0% 5.00 +/- 1% 20,0%
UNITED KINGDOM 2.00% - 2.00% -
URUGUAY 3.00% - 7.00% 40,0% 3.00% - 7.00% 40,0%
USA 2.00% - 2.00% -
UZBEKISTAN 5.00% - 5.00% -
VIETNAM <4% - <4% -
WEST AFRICAN STATES 2.00% +/-1% 50,0% 2.00% +/-1% 50,0%
ZAMBIA 6.0% - 8.0% 14,3% 6.0% - 8.0% 14,3%
Source: centralbanknews.info, IMF, data from central banks
It should also be noted that when
establishing the fluctuation corridor, the
upper and lower ranges have not only such a
characteristic as the absolute deviation, which
is usually expressed in percentage points, but
also the relative deviation, which is expressed
as a percentage. So, the analysis of global
statistics showed that among the countries in
which the IMF officially recognized the IT
regime, Ukraine had one of the lowest relative
deviations of the fluctuation corridor at 20%.
Of the 41 countries where the IMF has
recognized IT as the monetary regime, 30
countries had a relative deviation of the
fluctuation corridor more than in Ukraine. It is
necessary to pay attention to the current
inflation target: in Turkey, Uganda and
Uruguay – 5% +/- 2.0 p.p. (40%). Here is the
notable data for India and Paraguay 4% +/- 2.0
p.p. (50%), Brazil 3.75% +/- 1.5 p.p. (40%). It is
16
18. ISSN 2534-9228 (2021) VUZF review, 6(3)
obvious that the financial markets of Brazil,
India and Turkey are more developed than the
Ukrainian one, and the economies of these
countries are less open to the effects of
external shocks.
Notes:
• In the countries highlighted in yellow, the
IMF has officially recognized the inflation
targeting regime as a monetary regime,
according to the Annual Report on Exchange
Arrangements and Exchange Restrictions 2019
10/08/2020.
• Countries in semi-bold had a relative
deviation of the fluctuation corridor more than
in Ukraine
• In countries marked with “*”, the inflation
target changed upwards or downwards.
Summing up the analysis of world practice on
the establishment of the inflation target and the
corridor of fluctuations of such a target, it is
necessary to highlight several identified trends:
- in 2020/2021, when observing 70
countries (including the euro area), 3 cases were
recorded when the inflation target was reduced;
- of the 41 countries in which the IMF
officially recognized the IT regime, only 10
countries had a higher target or the same as in
Ukraine, in the other 31 countries it was lower
than the Ukrainian;
- out of 70 countries that set an inflation
target, 23 countries had a higher or the same
target as Ukraine;
- the corridor of target fluctuations in
relative terms among 41 countries with officially
recognized IT regime in 30 countries was much
larger than in Ukraine;
- with a decrease in the inflation target in
absolute terms, the corridor of permissible
fluctuations in relative terms also increased, but
there was a group of countries in which were the
similar to the Ukrainian target but the corridor of
fluctuations in relative deviation was much larger
than the Ukrainian 40-50% (in Ukraine 20 %).
Additional factors to consider
Taking into account the results of the analysis
of global trends in the setting of the inflation
target and the fluctuation corridor, it should be
taken into account that the size of the target
itself should have:
- economic basis and be a compromise
between the factor of price stability and
economic growth;
- take into account inflationary processes in
the economies of trading partners countries.
The corridor of fluctuations in the inflation
target should not play the role of artificially
increasing or decreasing inflation, but should be
realistic to achieve, taking into account the
available tools of the central bank. Too narrow
corridor would lead to more frequent non-
target inflation, too wide corridor is likely to lead
to a loss of targets for producers and consumers
in the domestic market (of course, if economic
agents focus on the official level of consumer
inflation).
Fig. 1. Data on inflation in the MTP countries
(main trading partners of Ukraine) and the
average consumer price index in the MTP
countries – UAwCPI,
Source: the NBU inflation report for July 2021
If you look at the level of average consumer
inflation in Ukraine's trading partners, it rose in
June 2021 to a record 4.2%, although in the
second half of 2020 it did not exceed 2.5%. In
June, the main inflation peak was observed in
Russia 6.5% (target 4%), Turkey 17.5% (target
5%), Belarus 9.9%, Poland 4.2% (target 2.5%)
and the United States 5 .4% (target 2%).
0
3
6
9
12
15
18
21
-2
0
2
4
6
8
10
12
01.19 07.19 01.20 07.20 01.21 06.21
UAwCPI EURO-zone Russia
Bilorussia Poland USA
China Turkey (RHS)
17
19. ISSN 2534-9228 (2021) VUZF review, 6(3)
Fundamental changes in the euro area
Among the MTP countries, only the euro area
has followed the 2% target, but in 2021 the ECB
changed the formulation of the inflation target
from “up to 2%” to “about 2%” in the medium
term, assuming that inflation may exceed 2%.
The changes took place on July 8, 2021 and
indicate that the ECB has taken a step towards
liberalizing the inflation targeting regime. The
2% figure, according to the ECB, is
“symmetrical”, i.e. both positive and negative
deviations from it will be assessed as
“undesirable”.
However, as 2% becomes a “symmetrical
target” in the medium term, the markets
perceived this change in the ECB's strategy (the
first since 2003) as a signal to a possible excess
of inflation in the euro area of 2%.
Countries with small and open economies on
the EU border, such as Ukraine, cannot ignore
either the dynamics of inflation in trading
partner countries or the changes that the ECB
has made for the first time since 2003. The euro
area is a promising trading partner of
neighboring countries, the share of which will
increase over time. Given the growth of UAwCPI
and the liberalization of the IT regime in the
Eurozone, a number of proposals will be
relevant for Ukraine.
Results and discussion
Our study allowed us to develop a number
of recommendations for countries with small,
open and commodity economies, which may
be worth listening to when implementing the
inflation targeting regime.
Firstly, countries with small economies do
not need to try to set the lowest target with
the narrowest possible corridor. If we are
talking about a country with an
underdeveloped financial market and
problems in the operation of monetary
transmission, the corridor should be set at
50% of the target.
Secondly, when setting the inflation target,
it is necessary to clearly link it with the
dynamics of inflation in the trading partner
countries, taking into account the forecast of
such inflation. If inflation in your country is
higher than inflation in trading partner
countries, it is likely that in the medium term
this situation will affect the exchange rate. It
is also not necessary to set a target much
lower than inflation in trading partner
countries. The target must be balanced.
Thirdly, central bank communications must
be ready for inflation targeting. It is necessary
to understand that not only the network of
communication channels should work, but
also it is necessary to achieve trust and purity
of perception of communications at the
moment of change of the discount rate. The
target audience for such communication is all
important economic agents: government,
business, population. The effectiveness of
such communications must be constantly
measured.
Fourthly, despite the fact that we found 3
out of 70 cases of lowering the inflation target
in 2020/2021, it should be understood that the
COVID-19 recession has seriously affected the
actual inflation in the world and most likely
inflation in the “Central and Eastern Europe”
region by the end of 2021 will be much larger
than expected. This was not a reason to
increase targets, but technically it could be a
good time to review the monetary strategy to
target inflation.
Given what target is currently set in most
developed countries, the central bank of each
country with an emerging market should try to
achieve the ability to set the target at 2%, +/-
1.0 p.p. However, this achievement must be
gradual. The country must go through serious
stages of preparation for a low target with a
narrow corridor, in particular, such stages
should include the development of the
national financial market and the preparation
of the communications system.
18
20. ISSN 2534-9228 (2021) VUZF review, 6(3)
Conclusions
Summing up the results of the study, it
should be noted that the monetary regime of
inflation targeting remains a universal
monetary regime to perform one of the main
functions of central banks – to maintain price
stability. However, it should be recognized
that the success of the use of inflation
targeting depends on the extent to which the
strategy and tactics chosen by the country's
central bank correspond to the characteristics
of the national (local) economy and the degree
of financial market development. The
experience of 70 inflation-targeting countries
shows that there is no general optimal target
level, nor is there a corridor for its
fluctuations. The set target should be
achievable, and the corridor should be such
that market participants, economic agents can
trust it. Confidence in the actions of the
central bank is the basis of inflation targeting
and at the same time a subjective component,
which is difficult to measure regularly, but on
which depends the behavior of major
economic agents.
References
IMF. World Economic Outlook, July 2021
IMF. Annual Report on Exchange
Arrangements and Exchange Restrictions
2019 10/08/2020.
Shapran V.S. The Influencing the "virus" crisis
on the monetary policy of Ukraine in 2020.
Center of research on name of Razumkov.
January 2021. Pages 112-115
Shapran V.S., Shapran N.S. Risks of monetary
stimulation of economic growth. Center of
research on name of Razumkov. March
2019. Pages 126-136
Shapran V.S., Associativity in foreign exchange
regulation in Ukraine. Scientific digest of
the Financial Research Institute 2018. Pages
89-91
bank.gov.ua
tradingeconomics.com
centralbanknews.info.
19
21. ISSN 2534-9228 (2021) VUZF review, 6(3)
Improving financial literacy of a selected group in favour of
eliminating crime
Jozefína Drotárová* А
; Andzej Misiuk B
; Zuzana Gedeonová C
A, B, C
University of Security Management in Košice, 2373/1, Košťova str., 04001 Košice, Slovakia
Received: August 25, 2021 | Revised: September 14, 2021 | Accepted: September 28, 2021
JEL Classification: I0, G5, Z1.
DOI: 10.38188/2534-9228.21.3.03
Abstract
The aim of this paper is to point out the connections and the relation between financial literacy,
poverty and criminal activities in the context of marginalized Roma communities in Slovakia. The
target group was selected on the basis of the negative statistics as presented below. Poverty is
one of the issues contributing not only to antisocial behavior of Roma communities but also
leading them to criminal activities. In the case of the Slovak Roma, 87% of them live in poverty.
The marginalized Roma communities are often linked to the so-called petty crime, which is
represented by thefts in stores, in groceries, in public means of transport, in the streets etc.
The research carried out using the problem analysis method was aimed at the initial structuring
of the research field and theoretical and conceptual preparation of tools for detailed
exploration. The study also contains an analysis of the financial literacy of the marginalized Roma
communities in Slovakia.
The survey results of the analysis indicate that the community is lagging behind in the area of
the financial literacy and education itself. Only a small percentage of the Roma have completed
education that is higher than elementary education. There are about 75% of unemployed Roma
that receive material need benefits. Since they are unemployed, they cannot take out a loan in
a bank. Therefore, another form of crime is the so-called usury, i.e. loaning money directly in a
community and with an extremely high interest rate.
There are two areas in the fight against crime caused by low financial literacy that may be
regarded as key areas, namely decreasing the level of poverty of the marginalized Roma
communities and financial education.
The article problematizes the hitherto unknown contexts of connections and the relation
between financial literacy, poverty and criminal activities in the context of marginalized Roma
communities in Slovakia and original survey focused on analysis of the financial literacy of the
marginalized Roma communities in Slovakia.
Keywords: financial literacy, marginalized Roma community, poverty, crime, elimination of
crime.
Introduction
Though financial literacy is a relatively new
term, the need and necessity for financial
education has existed beforehand. These days,
however, the need for education related to the
financial area is increasing in connection to not
only the electronic financial transactions,
* Corresponding author:
А PhD., Ing., MBA, MPH, Vice-Rector for Science and Research, e-mail: jozefina.drotarova@vsbm.sk, ORCID: 0000-0003-0168-7505
B Doctor of Science, Prof, e-mail: andrzej.misiuk@vsbm.sk, ORCID: 0000-0003-1371-6270
C
PhD, Ing., student, e-mail: zuzana.gedeonova@vsbm.sk, ORCID: 0000-0002-6907-4353
market development and a growing number of
loans offered by financial institutions, but also to
other financial products. The offer of new
financial products is at the same time
accompanied by an increasing indebtedness of
population in most countries. This fact has
20
22. ISSN 2534-9228 (2021) VUZF review, 6(3)
necessitated exact defining the term of financial
literacy (Balabán, 2011).
Financial literacy is the competence of people
dealing with managing their own money. It is a
combination of financial knowledge, skills,
attitudes and behavior that are necessary for
both making reliable financial decisions and
achieving financial well-being. (Halilovica et al.,
2019)
Financial literacy is usually measured on
individual levels and is after that generalized
into groups representing students of secondary
schools, universities, adults or adults on low
incomes, pensioners, etc. In his study, Škreblin
et al. (2011) define the notion of other form of
literacy, namely retirement literacy that includes
information and knowledge about the
retirement system of a particular country, and
the forms of private saving after reaching the
third age of life. The study also mentions the link
between the financial literacy and savings of the
population.
This study focuses on a specific target group
(marginalized Roma communities) that is
characterized by low employment rate,
receiving material needs benefits, low level of
education and frequent antisocial behavior.
Material and methods
We have tried to identify the term of financial
literacy, its aspects, types and definitions. The
method that we have decided to use is
represented by analyzing the available domestic
and foreign resources, examining the topic itself,
and subsequent synthesizing of the information
gained. On the basis of the mentioned we have
managed to identify the relation between the
financial literacy, poverty and committing
crimes.
The examination of the selected target group
(the marginalized Roma community in the
Slovak Republic) has been carried out by means
of a questionnaire focusing on adults. Analyzing
the survey results has brought two pieces of
information: 1. identifying problems and a
possible connection to committing crimes, 2.
proposing improvement possibilities of the
given situation.
Results and discussion
Financial literacy and its aspects
Financial literacy can be defined as educating
in and understanding of different financial
areas, including topics related to the
management of personal finances, money and
investment. The topic of the financial literacy
focuses on the ability of effective managing
personal financial matters and also includes
knowledge of making right decisions related to
personal finances, such as investment,
insurance, payment, budgeting, retirement and
tax planning (Kelton, 2020).
The financial literacy also includes the
knowledge of financial principles and concepts,
such as financial planning, complex interests,
debt management, profitable saving techniques
and time value of money. The lack of the
financial literacy can lead to bad financial
decisions, which can have a negative impact on
the financial prosperity of an individual. The
main priorities for achieving the financial
literacy include the following: gaining the skills
of how to create a budget, the ability of
monitoring expenses, learning the techniques of
how to repay debts, and effective planning for
retirement. These steps may also include advice
from a financial expert. Education itself within
the topic covers the understanding of how
money works, setting and achieving financial
goals and the management of internal and
external financial challenges.
The division of financial literacy can be
summarized into the following areas:
• Monetary literacy – the principle of
monetary literacy lies in the competence of
managing
cash and non-cash resources and carrying out
transactions by using means such as payment
tools and management of a standard account.
• Price literacy represents not only
21
23. ISSN 2534-9228 (2021) VUZF review, 6(3)
competences necessary for understanding price
mechanisms and inflation, but it also includes
the necessity of basic orientation in the tax
system and macroeconomic indicators of the
national economy.
• Budgetary literacy represents the skills of
managing personal and family budgets, setting
financial goals, using financial resources, and
managing financial assets and liabilities.
In addition to the above-mentioned, the
financial literacy must also include other literacy
elements, such as:
• numeric literacy – the need for numeric
operations in the process of decision-making;
• information literacy – the ability of using,
searching for and evaluating relevant
information;
• legal literacy – orientation in the legal
system regarding, for example, making financial
contracts (KANTNEROVÁ et al., 2013;
ŠKVÁRA, 2011)
According to Remund (2010), the financial
literacy falls into five categories, namely: 1.
knowledge of financial concepts; 2. ability of
communicating about financial concepts; 3.
competence of managing personal finances; 4.
skills in making adequate financial decisions;
and 5. trust in effective planning of future
financial needs.
Johnson E. and M. C. Sherraden, (2007) think
that it is more fitting to use the term of financial
capability instead of financial literacy. The term
financial capability includes financial knowledge
and access to financial institutions and services,
whereas insufficient financial literacy is also
linked to the global economic crisis that has
raised awareness of the need for improvement
of the financial literacy of the population (Azmi
et al, 2014).
Key aspects of the financial literacy
1. Budget basics
Creating and managing a budget is one of the
basic aspects of how to control own finances.
These days, creating a budget by means of web
pages or applications is easier than ever before.
It does not matter if mathematics is one of your
strong points. Thanks to adequate applications
anybody can manage their finances. And if the
applications are used in a proper way, they will
inform their user about how the money was
used.
2. The Impact of Interest
Although finances and transactions are
understood in terms of mathematics, it is
important also to understand other related
aspects. Not only will such a way help saving
even more money, but it may also indicate the
difference between borrowing a small amount
of money and having to return a much larger
amount of money. Understanding the impact of
interest can have a greater effect on finances
than is realized at the moment. Therefore, it is
important to consider and understand how
much and for what purpose the money to be
invested is needed, whether such financial
activities are important and how such a situation
will be solved in the future.
3. Saving
Saving is an important aspect of maintaining
a healthy financial status. However, most people
do not take into account this aspect as much as
they should. It is very easy to ignore things like
retirement, because the future seems to be too
far away. Early learning how to save money can
help gain knowledge, practice and skills useful
throughout your life.
4. Loans and Debts
As it is relatively easy to take out a loan these
days, therefore it is important to gain
knowledge about loans, debts, banks, non-
banking entities and conditions for taking out
and repaying a loan. If a loan is invested in a
correct way, it can be extremely helpful. On the
other hand, there is a danger of debt, which can
represent financial ruining of a debtor for many
years.
5. Identity theft issues and security
Identity theft is more real than ever before.
Since everything is digital, almost everyone
shops online, cashless and pieces of financial
information are more vulnerable to frauds.
Understanding such a concept and the
respective preventive measures, e.g. password
protection and limitation of the amount of
22
24. ISSN 2534-9228 (2021) VUZF review, 6(3)
information shared online, can be a key
condition towards maintaining safe accounts, or
otherwise it can lead to financial losses.
Therefore, it is important to protect your own
financial resources and get information about
online accounting in a safe way (HOYT, 2018).
Financial literacy in the world and in Slovakia
The current financial literacy in the world
varies from 20 to 80 per cent of the population
of a particular country. Financial literacy seems
to be the highest in countries with developed
economies, especially in Western Europe and
English speaking countries. According to this
study, financial literacy in Slovakia is below 50%.
However, this fact represents just a
comprehensive assessment of adult people
irrespective of their detailed specification.
Fig. 1. Financial literacy around the world,
financial literacy in Europe
Source: Howmuch, 2018
Financial literacy, poverty and crime
Financial literacy affects all age groups and all
social-economic levels. Financial illiteracy
causes many people to become victims of
predatory loans, mortgages, frauds and high
interest rates, which can lead to unsuitable
loans or bankruptcy (Investopedia, 2019).
A large number of theoretical empirical
researches indicate that the expenses meant for
social security, namely poverty decrease,
contribute to reducing crime. (Bjerk,2010) Low
level of financial literacy that is closely linked to
the lack of finances can also lead to increasing
criminality, especially thefts, assaults and
frauds. (Elliott, Ellingwort, 1996; Buck-
Hakim,1991). Poverty is one of the issues
involved in antisocial behavior. Conditionality of
crime and poverty also displays different
tendencies in individual types of crime. In case
of violent crime, the link to poverty is not so
strong. Closer link to poverty has been proven
between unemployment, social dependency
and property crime. This indicates that property
crime manifests a much stronger link to the
social-economic situation of an individual than
other types of crime. (Tomčíková, 2011;
Lubecová, 1996).
Marginalized Roma communities represent
a concentration of the Roma suffering from
deprivation and a high rate of social exclusion.
The Roma have been chosen for this paper on
the basis of the negative statistics presented
below. The results of the research show that
whereas 13% of the overall population of the
Slovak Republic is at risk of poverty, in case of
the Roma living in Slovakia it is 87%.
Fig. 2 Property in a marginalized Roma
community
Source: Vacula,2020
https://www.topky.sk/gl/405205/1713333/Priesku
m-priniesol-ohromujuce-statistiky--Takmer-90-
percent-Romov-zije-na-hranici-chudoby
This fact being based on the second EU-
survey and focusing on minorities was
presented by the Office of the Commissioner of
the government of the Slovak Republic for the
Roma communities, together with the European
union agency for Fundamental rights (FRA). The
survey collected data from nine EU-countries.
According to the research, two thirds of the
23
25. ISSN 2534-9228 (2021) VUZF review, 6(3)
Roma aged between 16 and 24 neither study nor
work. Preschool facilities are visited only by 34%
of the Roma children, and only a quarter of the
Roma citizens are employed (Topky.sk, 2016).
Fig. 3. Employment rate of the Roma living in
settlements densely concentrated in Slovak
villages
(in percentage terms)
The likelihood of committing crime in
adulthood is higher if the children grew up in a
poverty-stricken environment and they were
abused or neglected (Font-Jack, 2020). Contrary
to this dominant finding, several recent studies
have come to the conclusion that there is no
relation between measures having been taken
for the purpose of providing expenses meant for
social security, and crime. On the contrary, in
several cases the social support of the poor has
a negative effect on crime (Meloni, 2014).
Financial literacy of an individual is closely
linked to their financial situation. To avoid
financial distress, it is important to distribute
financial resources, and have an overview of the
prices of goods, services, banking and non-
banking entities and their offers, investment
possibilities, savings, insurance and other areas
related to finances and your property.
There are, however, frequent cases when a
family budget or budget of an individual gets
into negative numbers. In such cases, a solution
of how to finance next costs has to be sought.
The simplest way of getting finances is to borrow
them from a bank or a non-banking entity, even
at the cost of providing incorrect information. As
long as the loan is being repaid, everything is in
order. The problem arises when the loan is not
being repaid, and that is why the debtor can get
into conflict with the law. Through providing
incorrect information in making a loan
agreement, debters commit a loan fraud.
Many people being in a hopeless financial
situation and therefore getting into existential
problems, as a result of their own mistake or due
to other reasons, such people tend to resort to
theft or fraud.
Tab. 1 Selected criminal activity in Slovakia
between 2014 and 2018
Crime /
Year
2018 2017 2016 2015 2014
Thefts
(§ 212)
18 078 21331 23329 24882 30 292
Embezzle
ment
(§ 213)
559 622 706 785 851
Fraud
(§ 221)
2 158 2 264 2 312 2 700 3 008
Loan Fraud
(§ 222)
312 499 690 1 445 1 673
Source: Statistics of the Ministry of Interior of the
Slovak Republic
Roma and Crime
There is no Roma crime statistic. The idea of
recording the crime of the Roma was introduced
in 2017 by the former Minister of the Interior of
the Slovak Republic after his discovering that
although crime in Slovakia in general is
decreasing, it is, however, stagnating or even
growing in areas with a high Roma population.
(Filová, 2017).
Causes of the Roma crime arranged from the
preschool age to the adulthood:
1. The way of raising Roma children is in many
cases fundamentally different from the white
majority. Roma children represent means of
acquiring finances from the state, and their
upbringing is often being neglected, especially in
Roma settlements. The upbringing of Roma
children is very loose and non-directive.
2. Education for the Roma children at the first
and second stages of the compulsory
attendance is more an obligation than a form of
being educated.
3. Unemployment of the Roma represents a
problem for the society as a whole. The reason
for the unemployment consists in the lack of
their education, and the mutual attitude
24
26. ISSN 2534-9228 (2021) VUZF review, 6(3)
between the white majority and the Roma
themselves. Just the unemployment
demoralizes and criminalizes the Roma the
most. Having just a below average education,
the Roma can carry out only manual work,
however a considerable part of the Roma
considers physical work unacceptable and
degrading. One of the main reasons for the
unemployment of the Roma is the system of
social benefits, which motivates the Roma not to
work.
4. Antagonistic relation between the white
majority and the Roma.
Říčan (1998) refers to this fact as a cold war
between the majority and the Roma. His
interpretation indicates that the crime being
committed by the Roma is a reaction to the
war with the “white” dominance. The Roma
in our society feel like strangers not willing to
accept our norms and values. A
manifestation of such a behavior of the Roma
reflects racist attitudes on the part of the
white majority.
5. Roma culture, folklore and way of life do
not have a regular and steady regime. (Ričan,
1998).
Analysis of the financial literacy of the
marginalized Roma Communities
For the purpose of analyzing the financial
literacy of the marginalized Roma community, a
quantitative survey was used. The information
source is represented by a questionnaire;
completing the questionnaire was anonymous
and voluntary. All respondents were addressed
in person and electronically by email and social
networks. The questionnaire consists of 19
questions grouped into 4 areas:
1. area of education and employment of the
Roma,
2. area of financial situation of the Roma,
3. area of financial education of the Roma,
4. relation of the respondents to financial
institutions and loan products.
Survey objective: analysis of financial literacy
of the marginalized Roma communities
Target group: people of the marginalized
Roma communities living in Slovakia
Evaluation of the survey
218 people aged between 18 and 68 have
been addressed and 134 of them have
completed the questionnaire. As part of the
evaluation, the answers were split into two age
categories, specifically 18 – 38 and 39 – 68. The
first age category contained 71 respondents,
whereas the second category consisted of 63
respondents.
1. Education and employment of the
respondents
The evaluated data and the answers of the
respondents indicate that three quarters of the
total number of the respondents have
completed the basic education of the second
stage, and 17% of the respondents have
completed the basic education of the first stage.
Secondary education has been completed by
6%, and tertiary by 3% of the respondents. All
respondents with completed secondary and
university educations are at the age between 18
and 38 years.
Unemployment of the respondents is around
72%. Only 18% of the respondents have been
employed for longer than 3 years.
Unemployment between the age of 18 and 38
years is represented by 76%, whereas between
the age of 39 and 68 years is the unemployment
present with 67%. In terms of unemployment,
33% of the respondents have been unemployed
for less than 3 years, and 30% of the
respondents for more than 3 years. About 54%
of the respondents receive social benefits,
whereas other 18% do not know if they receive
any benefits, or they were not able to tell
exactly. 28% of the respondents do not receive
any benefits at all.
2. Current financial situation of the
respondents
Only 22% of the respondents are able to
cover their monthly expenses by their monthly
income. 55% of them are not able to cover their
expenses at all, and 23% of the respondents
were not able to answer clearly.
In the absence of financial resources, 45% of
the respondents borrow the missing finances
from their family and relatives, 18% of the
25
27. ISSN 2534-9228 (2021) VUZF review, 6(3)
respondents use loan products of banking and
non-banking companies, and 37% of the
respondents get finances in a different,
unspecified, way. The percentage of the
answers concerning the lack of a monthly
income was as similar in the age classification of
the respondents as it was in the overall
evaluation. Up to 53% of the respondents spend
their monthly income immediately during the
first days of a month, namely up to 60% of the
total income. Only 21% of the respondents
spend less than 30% of their total income during
the first days of a month, and 16% of the
respondents spend more than 60% (during the
first days of a month). At the age between 18
and 38 years, 35% of the respondents spend less
than 30% of their income, and at the age
between 39 and 68 years, only 5% of the
respondents spend less than 30% of their
monthly income.
3. Financial literacy
63% of the total amount of the respondents
have not encountered financial education yet,
and therefore have no relevant information or
knowledge of this area, 14% of the respondents
have knowledge of this area, and 23% of the
respondents were not able to answer clearly. In
terms of the age classification of those dealing
with information from the area of financial
education, 24% of the respondents are at the
age between 18 and 38 years, and only 1% at the
age between 39 and 68 years. 61% of the
respondents answered that it is not important
for them to be familiar with the area of finances.
8% of the respondents had a neutral opinion on
this matter without having a clear answer. 69%
of the respondents aged between 18 and 38 and
only 27% of the respondents aged between 39
and 68 place emphasis on financial education
within their education. 31% of all the
respondents think that financial education is not
important, and 20% of the respondents did not
have a clear opinion.
The question number 12 focuses on the
meaning of the term literacy. The results show
that 48% of the respondents think literacy is the
ability to speak and listen, or to read and write
(39%), or to think and to create (25%). 47% of
the respondents aged between 18 and 38 and
32% of the respondents aged between 39 and
68 knew the correct answer, namely that
literacy is the ability to read and write.
4. The relation of the respondents to
financial institutions and loan products
57% of the total number of respondents have
a bank account, namely 82% aged between 18
and 38, and only 30% aged between 39 and 68.
Internet banking services are used by only 7% of
the total number of the respondents and only
3% of the respondents aged between 39 and 68.
Of the total number of the respondents, 10%
have a loan product from a bank, and 32% from
a non-banking company.
If the respondents are interested in loan
products, they, for the most part, contact a non-
banking company. Only 23% of the respondents
answered the question about what a credit
interest is correctly. The correct answer was
known by 11% of the respondents aged
between 39 and 68, and 34% of the respondents
aged between 19 and 38. 44% of the
respondents are of the opinion that they will
have to pay higher interest rates to a non-
banking company, 30% of the respondents think
they will have to pay a higher interest rate to a
bank, and 26% of the respondents were not able
to answer the question.
Conclusions
The marginalized Roma communities are
often linked to the so-called petty crime, which
is in practice represented by thefts in stores,
groceries, public means of transport, on the
streets and by other form of petty thefts. The
petty crime is especially linked to poverty and to
the basic needs not being fulfilled, either in case
of an individual or their family. However,
committing thefts, as a result of having to
ensure basic needs, has turned into stealing
valuables of the white majority (ŘÍČAN, 1998).
As stated above, 87% of the Roma population in
26
28. ISSN 2534-9228 (2021) VUZF review, 6(3)
Slovakia is stricken by poverty. In the fight
against the petty crime, it is necessary to focus
also on fighting the causes of poverty, especially
in risky regions. Unemployment of the Roma is
represented by around 72%, whereas only 28%
of the Roma do not receive any social benefits
from the state. Based on the results as
presented above, as well as on the evaluation of
another area of the survey of the analytical
section of this paper, it is obvious that the
financial situation of the Roma is negative. Only
22% of the addressed Roma are able to get by
on their monthly income, whereas the rest is
forced to borrow money from their family,
relatives or financial institutions. This way of
money gaining increases the indebtedness of
the Roma; up to 37% of them get their missing
finances in a different, unspecified way. 57% of
all the Roma addressed have a bank account,
and only 7% of them use Internet banking
services.
Various studies show that education is a
major factor in favour of reducing crime.
(Nguyen, 2019) This fact represents not only
classic education, but also investments into
science and research. (Zamana et al, 2019)
Stango and Zinman (2009) emphasize that those
who are not able of correct calculating interest
rates based on a current payment have to
borrow more money and can save less money.
In the area of the financial literacy and overall
education, the results of the selected target
group are negative. Up to 74% of the total
number of the respondents have completed
only basic education of the second stage. 63% of
the Roma is completely unfamiliar with the area
of the financial education, and more than half of
them do not place emphasis on familiarization
with the respective area. Only 39% of the
addressed Roma were able to correctly define
the term literacy.
Reducing the rate of poverty of the
marginalized Roma communities, and financial
education appear to be key areas of fighting
crime caused by the low financial literacy. In the
end, it is important to point to the necessary
changes within not only the overall literacy, but
also the financial one in case of the Roma fellow
citizens, to improve their financial
independence and to reduce crime due to their
low financial literacy. In this respect, it is
necessary to appeal to the increasing of complex
education of the Roma children from the first
grade of the elementary schools, to monitoring
their attendance, and in terms of receiving social
benefits to drawing consequences for the
parents of children who do not participate in the
process of education. It is important to begin
with intensive financial educating at the second
stage of elementary schools. For this purpose, it
is necessary not only to change the structure of
the education and legislature in this area, but
also to educate teachers. Within educating
adults, financial education should represent a
compulsory part of the rules related to receiving
material needs benefits provided by the Office
of social affairs and family, and the financial
literacy of the Roma should be also supported by
providing them with literature depending on
their registration at the Employment office
within a specified periodicity. Financial
education should also be publicized in some
way, and lectures should be given in the field as
well.
Draft of the concept of the adult education
The concept of the financial education
including practical advice, exercises,
recommendations and a theoretical explanation
of the basic terms could be structured into 3
units:
1. Recommendations for the area of
domestic management, e.g. recording expenses,
looking for ways of how to decrease expenses,
prioritizing purchases and motivating the
children.
2. Recommendations for the area of
creating reserves – regular creating financial
reserves in different ways.
3. Recommendations for the area of
financial products – overview of the products,
basic knowledge, thorough reading of contract
conditions, consistency and vigilance.
27
29. ISSN 2534-9228 (2021) VUZF review, 6(3)
References
Azmi Abdullah, M., Chong, R.2014 Financial
Literacy: An Exploratory Review of the
Literature and Future Research, Journal of
Emerging Economies and Islamic Research,
2014, Vol. 2, No. Available from:
http://www.jeeir.com/v2/images/Vol2No32
014/129-284-1-PB.pdf.
Balabán, Z. (2011). Šlabikár finanční
gramotnosti: učebnice základních 7 modulu
finanční gramotnosti. 2. aktualiz. Praha:
Cofet. 416 s.
Bjerk, D. Thieves, thugs, and neighborhood
poverty, Journal of Urban Economics Volume
68, Issue 3, November 2010, Pages 231-246
Available on:
https://doi.org/10.1016/j.jue.2010.06.002.
Buck, A. And Hakim, S. (1991), "Are Property
Values Being Adversely Affected by Crime?",
Journal of Property Valuation and Investment, Vol.
9 No. 1, pp. 37-44. https://doi.org/10.1108/
EUM0000000003296.
Elliott, C., Ellingworth, D. (1996), "The relationship
between unemployment and crime: A cross‐
sectional analysis employing the British Crime
Survey 1992", International Journal of
Manpower, Vol. 17 No. 6/7, pp. 81-88.
https://doi.org/10.1108/0143772961014935.
Font, S.A.-Jack,K.M. (2020),It’snot “Just poverty”:
Educational, social, and economic functioning
among young adults exposed to childhood
neglect, abuse, and poverty, Child Abuse &
Neglect, Volume 101, March 2020, 104356
Available on:
https://doi.org/10.1016/j.chiabu.2020.10435.
Halilovica, S. Zaimovicb, A. Berilob, A.A.
Zaimovic, T. (2019), Financial Literacy
Assessment in Bosnia and Herzegovina, 3rd
World Conference on Technology, Innovation
and Entrepreneurship (WOCTINE) Procedia
Computer Science 158 (2019) 836–843
10.1016/j.procs.2019.09.121. Available from:
https://reader.elsevier.com/reader/sd/pii/S187
7050919312918?token=3B66F969E642BEAC
5BE157E7FFB2F9333BA691C3ED754610C86
5F91309C89879C94F3355864E6AD6ED14AD
8A93BC4F5F
Hieu T.M. Nguyen (2019), Do more educated
neighborhoods experience less property
crime?
Evidence from Indonesia, International Journal
of Educational Development, Volume 64,
January 2019, Pages 27-37 Available on
https://doi.org/10.1016/j.ijedudev.2018.12.
005
Howmuch (2018), Visualizing Financial Literacy
Rates Around the World.
Available on: https://howmuch.net/articles/
financial-literacy-around-the-world
Hoyt, E. (20. 5 2018). The 5 Key Components of
Financial Literacy. Available from:
https://www.fastweb.com/student-
life/articles/the-5- key-components-of-
financial-literacy
Johnson, E., Sherraden, M.S. (2007), "From
Financial Literacy to Financial Capability
Among Youth," The Journal of Sociology &
Social Welfare: Vol. 34: Iss. 3, Article 7.
Available from: https://scholarworks.wmich.
edu/jssw/vol34/iss3/7
Kantnerová, L., & Et Al. (2013), Finanční
gramotnost v České, Polské a Slovenské
republice. České Budéjovice: Jihočeská
univerzita. 171 s. ISBN 978-80-7394-436-0.
Kelton, W. (2020), What Is Financial Literacy?
Available from: https://www.investopedia.com/
terms/f/financial-literacy.asp
Lubelcová, G.: Sociálna podmienenosť
regionálnej diferencovanosti kriminality na
Slovensku. Sociológia: 1996, č. 28 s. 575-586,
Slovaki
Meloni, O. (2014), Does poverty relief spending
reduce crime? Evidence from Argentina,
International Review of Law and Economics
Volume 39, August 2014, p.28-38 Elsevier,
https://doi.org/10.1016/j.irle.2014.05.002
Remund, D. L. (2010), Financial literacy explicated:
The case for a clearer definition in an
increasingly complex economy. Journal of
consumer affairs, 44(2), 276-295,
https://doi.org/10.1111/j.1745-
6606.2010.01169.
Říčan, P. (1998), S Romy žít budeme – jde o to
28
30. ISSN 2534-9228 (2021) VUZF review, 6(3)
jak: déjiny, současná situace, koreny
problémú, nadéje společné budoucnosti.
Praha: Portál. ISBN: 80-7178-250.
Stango, V., Zinman, J. (2009), Exponential growth
bias and household finance. The Journal of
Finance, 64(6), 2807-2849 Available from:
https://onlinelibrary.wiley.com/doi/abs/10.11
11/j.1540-6261.2009.01518.x
Škreblin Kirbiš, I., Tomić, I., Vehovec, M. (2011.),
Retirement literacyand savingsforthethirdlife
age. Revija za socijalnu politiku, 18(2): 127-148.
Croatia doi.org/10.3935/rsp.v18i2.1004
Available from: https://hrcak.srce.hr/index.
php?id_clanak_jezik=105676&show=clanak
Škvára, M. (2011), Finanční gramotnost. Praha: M.
Škvára, 211s. ISBN: 978-80-904823-0-2.
Available from: http://www.nsrr.sk/sk/
horizontalne-priority/marginalizovane-
romske-komunity/
Tomčíková, T. (2011), Vzťah kriminality a
chudoby. In. Rizikové súvislosti chudoby a
rodiny v súčasnej slovenskej spoločnosti
P.155-161, Slovakia, Available from:
https://www.prohuman.sk/files/zilova_rizik
ove_suvislosti_chudoby.pdf
Zamana, K.-Usman, B.-Sheik, S., M.-Iswand-
Khane, A.- Kosnine, A.B.M.- Rosmane, A.S.B.
Ismaile, S.- Alie, F.D.- Hishanf, S.S. (2019)
Managing crime through quality education: A
model of justice, Science & Justice Journal
Volume 59, Issue 6, Pages 597-605,
https://doi.org/10.1016/j.scijus.2019.08.00.
29
31. ISSN 2534-9228 (2021) VUZF review, 6(3)
Methodology for assessment of food security of countries
Robert Jurczak * А
A State University of Applied Sciences in Konin, Przyjaźni 1, 62-510, Poland
Received: June 10, 2021 | Revised: August 28, 2021 | Accepted: September 11, 2021
JEL Classification: Q17, Q18.
DOI: 10.38188/2534-9228.21.3.04
Abstract
A comprehensive assessment of national food security should include an analysis of the physical
and economic accessibility of food, the level and quality of nutrition of the population, the
sustainability and competitiveness of agriculture, factors and trends of self-sufficiency in the
main types of agricultural products, raw materials and food and the effectiveness of foreign
trade in food. To assess the food security situation at the state level, it is necessary to conduct
monitoring, which consists in determining the deviations of the main indicators from the criteria
and thresholds established at the national level. The monitoring should determine the format of
the national report on the country's food security. The number of indicators that make up its
basis, should be optimal and sufficient to reflect the level of food security of the country and
compare them with the situation in other countries. At the same time, it is necessary to analyze
trends in ensuring food security at the global level in terms of the progress of countries and
regions of the world in achieving the goals of sustainable development in agriculture, the
elimination of hunger and poverty for the period up to 2030. Conducting a study of the
components of the global food security index, formed at the world level to measure the policy
and efficiency of government agencies in the field of food security, is relevant and in demand
for positioning the country within the framework of international comparison of countries.
Keywords: food security, European Union states, integrated assessment, criteria, indicators,
levels, index, products and food quality.
Introduction
At the present stage, there are several levels
of provision of a state with the main types of
food. The first level is the state's absolute self-
sufficiency in the most important types of food,
when domestic demand is less than national
agricultural production and there is a possibility
of exporting it. The second level is when a
country produces only food necessary for
domestic consumption, as a rule, by limiting
overproduction in order to stabilize food prices
and break even agricultural producers.
The third level is that the import of food
products into the country does not exceed 15-
20% of their annual consumption (optimal
import).
The fourth level is when about 30% of food
consumed in the country depends on imports
*
Corresponding author: Ph.D. State University of Applied Sciences in Konin, e-mail: robert.jurczak@konin.edu.pl., ORCID: 0000-0002-0546-7385
(the threshold level at which there is already a
threat to food security).
The fifth level is the state's food dependence
on supplies from other countries of the world.
Imports exceeding 30% create risks of food
crises, increasing impoverishment, natural
migration and depopulation of the population.
In the EU countries, there are strict restrictions
on the import of food products from non-EU
countries, both in terms of customs and tariff
regulation, and in terms of technical control
systems for the safety of imported food. The
assortment variety, high quality and availability
of food products in these countries are ensured
by the absence of customs barriers when
moving food products within the EU. The EU
countries have developed agriculture and high
30
32. ISSN 2534-9228 (2021) VUZF review, 6(3)
shares of agricultural imports in the domestic
market.
To assess the state of food security in the
world, there are various methodologies based
on different sets of indicators. At the
international level, since 1996, FAO has been
conducting annual monitoring that provides an
ongoing analysis of food security in the world, in
2011 an open database was created on the
FAOSTAT website, since 2012 the Global Food
Security Index has been calculated. The FAO
indicator system consists of four indicators:
1) physical availability of food; 2) food
affordability; 3) stability of food supply; 4) food
consumption. The definitions of indicators
representing are given and combined into one
statistical database on the FAOSTAT website.
Conducting a study of the components of the
global food security index, formed at the world
level to measure the policy and efficiency of
government agencies in the field of food
security, is relevant and in demand for
positioning the country within the framework of
international comparison of countries.
Material and methods
Assessment of the state of food security of
the country, on the one hand, is determined by
the stability of the population's access to food,
that is:
⁻ physical availability of food, which is
understood as the availability of food
throughout the country at any time and in the
required range;
⁻ economic accessibility of food products,
which means that the level of income,
regardless of social status and place of
residence of a person, allows him to purchase
food to maintain an active and healthy
lifestyle;
⁻ quality, completeness and balance of
nutrition, which implies that food products
should be safe for health, the diet should be
high in calories and balanced in proteins, fats,
carbohydrates, trace elements and vitamins.
On the other hand, the level of food security
is characterized by the creation of the necessary
insurance reserves of food and a reserve of
foreign exchange resources necessary to import
the missing food, to ensure the country's food
independence, which is an important element of
national security. In this context, the country's
food security is ensured not only by a set of
economic and social conditions associated with
the development of agriculture and food
production, but also by the general state of the
national and world economy.
There is also significant sectoral
differentiation in household income,
exacerbated by inequality in food consumption.
The stratification of society by the level of
income is a threat to the national security of the
country and therefore its assessment using
income groups by the level of food consumption
is also one of the aspects of the work on
compiling a system of indicators characterizing
food security.
The physical availability of basic food
products for the population consists in a stable
national production of food products, optimal
imports, the availability of food products
throughout the country, including remote
settlements, in an assortment and volume that
fully satisfies the demand of the population and
corresponds to the recommended consumption
rates, at every moment of time. It depends on
domestic production, the ability to import food
and the level of development of the commodity
distribution infrastructure.
It should be borne in mind that in the modern
world, only raw materials are found on a farm or
in the field, a food product is formed in the areas
of processing, packaging, storage,
transportation and trade. In this connection,
even if a country is able to independently
produce a significant volume of agricultural
products, but does not have a sufficiently
developed market infrastructure, the physical
availability of food will be low. Often, the
functioning and expansion of retail chains leads
to monopolization of this market segment,
complicating access to it for agricultural
producers, maintaining a high level of consumer
prices for food.
31