HOUSEHOLD FINANCES IN THE SHADOW ECONOMY OF UKRAINE: PROBLEMS AND PROSPECTS FOR DE-SHADOWING

Abstract

This study substantiates the relevance of analyzing the shadow economy in Ukraine through the lens of household finances. This approach is especially important under the current conditions of economic instability caused by the full-scale war, ongoing financial and institutional transformations, and the overall decline in public trust toward state institutions. The purpose of this research is to identify the key determinants of shadow economy growth within the household sector and to justify effective measures for its reduction in the modern context. The research objectives include assessing the structure of household incomes, the role of social benefits, the dynamics of savings, the level of investment activity, and the extent of participation in informal economic activities.
The methodological basis of the study involves economic and statistical tools, particularly correlation analysis, which made it possible to identify significant interrelations between selected indicators of household financial behavior and the size of the shadow sector. The results demonstrate a notable inverse correlation between the share of social benefits in total income and the level of economic shadowing. Additionally, a weak negative relationship was found between investments in securities and the scale of the shadow economy, which highlights the role of capital market development in promoting financial transparency.
In conclusion, the study emphasizes the importance of decentralizing the management of social transfers, strengthening the domestic capital market, and restoring confidence in financial institutions as crucial steps toward reducing shadow economic activity. Specific recommendations are provided for enhancing the transparency of financial flows within households and for designing more effective fiscal and social policies aimed at fostering economic formalization.