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On the Identification of Financial Instruments in the Aspect of Indicators of Financialization of the Economic Life of Economic Entities

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Smart Technologies and Innovations in Design for Control of Technological Processes and Objects: Economy and Production (FarEastСon 2018)

Part of the book series: Smart Innovation, Systems and Technologies ((SIST,volume 138))

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Abstract

The study is to show the problem of financialization of the economic entities as a result of development of the financial sector of economy, basing on using of financial instruments (FI) that have a “virtual” form. This includes financial instruments hold for trade and financial derivatives (PFI) that complicate financial relations based on financial speculation and divorced from the real sector of the economy into a parallel plane filled with abstract categories. Under these conditions entities use FI to generate additional income, which adversely affects the development of the real economy, both in general and at the level of the business unit (the entity). Therefore there are suggestions to classify FI and PFI according to their type, value measurement and their cash flow to assess their impact on financialization in the article. This allows to correct the financial items of the Statement of Financial Position by eliminating “non-financial” items related to cash flow and financial income reflected in the statement of Income Statement by excluding items that are not secured by cash flows (similar to the EBITDA analytical indicator). It also gives the opportunity to distinguish items directly influencing the processes of financialization, which include, first of all, FI that are revalued at fair value through profit and loss. Moreover, there are recommendations in the article about modification of the information base for financial analysis of entities and supplementing it with ratios that take into account the evaluation factor of financialization.

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Authors and Affiliations

  1. Far Eastern Federal University, Vladivostok, 692200, Russia

    O. Zhitlukhina & E. Kiselevskaia

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  1. O. Zhitlukhina
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  2. E. Kiselevskaia
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Correspondence to O. Zhitlukhina .

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Editors and Affiliations

  1. Department of Innovatics, Engineering School, Far Eastern Federal University (FEFU) , Vladivostok, Russia

    Denis B. Solovev

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Zhitlukhina, O., Kiselevskaia, E. (2020). On the Identification of Financial Instruments in the Aspect of Indicators of Financialization of the Economic Life of Economic Entities. In: Solovev, D. (eds) Smart Technologies and Innovations in Design for Control of Technological Processes and Objects: Economy and Production. FarEastСon 2018. Smart Innovation, Systems and Technologies, vol 138. Springer, Cham. https://doi.org/10.1007/978-3-030-15577-3_42

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