MAIN APPROACHES TO DIVERSIFYING SOURCES OF FINANCING OF THE TERRITORIAL COMMUNITIES
DOI:
https://doi.org/10.17721/1728-2667.2024/225-2/3Keywords:
financing the development of territorial communities, diversification of financing sources, public-private partnership, sustainable development, innovative financial instrumentsAbstract
B a c k g r o u n d. The sustainable development of territorial communities requires significant investments from local budgets. Different sources can be used to finance them, meaning that they need to be diversified, taking into account the specifics of the projects that require funding. The list of available sources of funding is determined by the financial mechanism that has been formed in the local budget, the financial stability of the budget, and the national legal and regulatory framework. The purpose of the article is to analyze the main approaches to diversifying sources of funding to finance sustainable development and restoration of territorial communities and to develop recommendations for using innovative financial instruments for this purpose.
M e t h o d s. The study used a comprehensive approach, which includes an analysis of scientific literature, regulatory documents and statistical data. The analysis of legal acts was carried out to understand national and international regulation in the field of using various sources to finance territorial communities. A comparative analysis was applied to study the experience of other countries, which allowed us to identify successful strategies and initiatives aimed at stimulating the development of territorial communities.
R e s u l t s. Based on the analysis of the main financing mechanisms for the development of territorial communities, it was established that for successful sustainable development, territorial communities cannot use exclusively their own funds, therefore it is necessary to attract external resources through the issuance of municipal bonds, bank loans, grants, international aid and public-private partnerships. The available sources of financing are determined by the established financing mechanism of the local budget, which is traditionally organized within the framework of four possible systems. For each project and type of activity of local authorities, you need to choose your source of resources, based on the project's payback conditions.
C o n c l u s i o n s. Diversification and the use of innovative financial instruments for attracting financial resources by territorial communities, in particular public-private partnerships oriented towards sustainable development, especially for financing large infrastructure projects, are recommended.
Downloads
References
Aleksandrova-Zlatanska, S., & Kalcheva, D. Z. (2019). Alternatives for financing of municipal investments – green bonds. Rev. Econ. Bus. Stud., 12(1), 59–78. https://doi.org/10.1515/rebs-2019-0082
Bezverkhniuk, T.M., & Azarova, I., B. (2024). Problem issues of planning the restoration of territorial communities and regions in the context of the European intergration of Ukraine and the challenges of martial state. Visnyk of Kherson National Technical University, 2(89), 273–279. [in Ukrainian]. https://doi.org/10.35546/kntu2078-4481.2024.2.39
Blanck, M., & Ribeiro, J. L. D. (2021). Smart cities financing system: An empirical modelling from the European context. Cities, 116, 103268. https://doi.org/10.1016/j.cities.2021.103268
Castelblanco, G., Guevara, J., & De Marco, A. (2024). Crisis management in public–private partnerships: lessons from the global crises in the XXI century. Built Environment Project and Asset Management, 14(1), 56–73. https://doi.org/10.1108/BEPAM-11-2022-0174
Celeberda, T., Dalik, V., Babii, S., Yarmus, S., & Zlotogurskyi, K. (2023). Innovative methods of improving financing of territorial communities in the post-war period. Academic Visions, (20) [in Ukrainian]. http://dx.doi.org/ 10.5281/zenodo.8369953
Cestau, D., Hollifield, B., Li, D., & Schürhoff, N. (2019). Municipal bond markets. Annual Review of Financial Economics, 11(1), 65–84. https://doi.org/10.1146/annurev-financial-110118-123034
Cheng, Z., Wang, H., Xiong, W., Zhu, D., & Cheng, L. (2021). Public–private partnership as a driver of sustainable development: Toward a conceptual framework of sustainability-oriented PPP. Environment, Development and Sustainability, 23, 1043–1063. https://doi.org/10.1007/s10668-019-00576-1
Cornaggia, K., Hund, J., & Nguyen, G. (2022). Investor attention and municipal bond returns. Journal of Financial Markets, 60, 100738. https://doi.org/10.1016/j.finmar.2022.100738
Gorelick, J., & Walmsley, N. (2020). The greening of municipal infrastructure investments: Technical assistance, instruments, and city champions. Green Finance, 2(2), 114–134. https://doi.org/10.3934/GF.2020007
Jerch, R., Kahn, M. E., & Lin, G. C. (2023). Local public finance dynamics and hurricane shocks. Journal of Urban Economics, 134, 103516. https://doi.org/10.1016/j.jue.2022.103516
Lyutiy, I., Rozhko, O., & Liutiy, S. (2023). Optimization of state budget expenditures in the Ukraine during the war time. World of finance, 4(73), 45–55. [in Ukrainian]. https://doi.org/10.35774/sf2022.04.045
Lyutiy, I., Zaichykova, V., & Shulga, D. (2024). Asymmetric fiscal decentralization in the conditions of regional recovery of Ukraine. [in Ukrainian]. Scientific Bulletin of Polissia, (2(27), 89–108. https://doi.org/10.25140/2410-9576-2023-2(27)-89-108
Martseniuk, O., Humenna, O., & Dendobra, T. (2023). Prospects for strengthening the financial self-sufficiency of territorial communities under the conditions of decentralization. Economy and Society, 51 [in Ukrainian]. https://doi.org/10.32782/2524-0072/2023-51-50
Meloche, J. P., & Vaillancourt, F. (2021). Municipal Financing Opportunities in Canada: How Do Cities Use Their Fiscal Space?. IMFG Papers on Municipal Finance and Governance 52, 43. https://tspace.library.utoronto.ca/bitstream/1807/105277/3/imfgpaper_no52_meloche_vaillancourt_financingopportunities_April_8_2021.pdf
Munko, А. (2024). Local loan bonds as a tool for financing projects of construction and revitalization of territories. Scientific Herald: Public Administration, 1(15), 306–323. https://doi.org/10.33269/2618-0065-2024- 1(15)-306-323
Nemec, J., & Špaček, D. (2020). The Covid-19 pandemic and local government finance: Czechia and Slovakia. Journal of Public Budgeting, Accounting & Financial Management, 32(5), 837–846. https://doi.org/ 10.1108/JPBAFM-07-2020-0109
Panchyshyn, B. (2024). Foreign experience of financing the development of territorial communities. Naukovì perspektivy, 7(49). https://doi.org/ 10.52058/2708-7530-2024-7(49)-484-495
Partridge, C., & Medda, F. R. (2020). The evolution of pricing performance of green municipal bonds. Journal of Sus-tainable Finance & Investment, 10(1), 44–64. https://doi.org/10.1080/20430795.2019.1661187
Petrov, D. (2023). Determinants of Choosing Sources of Financing for Municipal Projects. Vallis Aurea, 1(1), 56–63. https://doi.org/10.2507/IJVA.1.1.5.5
Postula, M., & Raczkowski, K. (2020). The Impact of Public Finance Management on Sustainable Development and Competitiveness in EU Member States. Journal of Competitiveness, 12(1), 125–144. https://doi.org/10.7441/joc.2020.01.08
Robinson, J., Harrison, P., Shen, J., & Wu, F. (2021). Financing urban development, three business models: Johannes-burg, Shanghai and London. Progress in Planning, 154, 100513. https://doi.org/10.1016/ j.progress.2020.100513
Rybnicek, R., Plakolm, J., & Baumgartner, L. (2020). Risks in public– private partnerships: A systematic literature review of risk factors, their impact and risk mitigation strategies. Public Performance & Management Review, 43(5), 1174–1208. https://doi.org/10.1080/15309576.2020.1741406
Vammalle, C., & Bambalaite, I. (2021). Funding and financing of local government public investment: A framework and application to five OECD countries. ECD Working Papers on Fiscal Federalism, 34, OECD Publishing. https://doi.org/10.1787/162d8285-en
Wilmanowicz-Słupczewska, M., & Wantoch-Rekowski, J. (2024). Local government finances in the constitutions of selected European countries against the background of" model" regulations. Toruńskie Studia Polsko Włoskie, 199–242. http://dx.doi.org/10.12775/TSP-.2023.012
World Bank. (2024). Ukraine. Rapid damage and needs assessment (RDNA3). https://documents1.worldbank.org/curated/en/099021324115085807/pdf/P18017 41bea12c012189ca16d95d8c2556a.pdf?gl=1*aw5nmh*_gcl_au*NjgxMTI0MjAu MTcyNjcwNzc5Nw
Downloads
Published
Issue
Section
License
Copyright (c) 2025 асп. Володимир КОВАЛЕНКО, д.е.н., проф., Ігор ЛЮТИЙ
This work is licensed under a Creative Commons Attribution 4.0 International License.
Please read more here: https://econom.bulletin.knu.ua/copyright
