Farm's Financing Patterns and Financial System Development : Evidence from Ukraine and Poland

Using integral indicator of financial system development, we investigate how the financial system in Ukraine and Poland developed during 2010-2015 and how financial system development affects financing of farms in Ukraine and Poland. The results of the study indicate that there was a rapid decline in the development of Ukraine's financial system during 2010-2015 and positive tendency in the development of Polish financial system. The results of the paper deny the findings of some researchers that in countries with a less developed financial system, the role of external financing is lower. The results of the study showed that the dependence of Ukrainian farms on external financing increased significantly during 2010-2015. The main feature was that external financing grew not due to an increase in bank loans but due to informal sources. Contrary to Ukraine in Poland, the study revealed a strong statistical relationship between the integral indicators of the financial system and indicators characterizing the financing patterns of agricultural enterprises. This gives some arguments in favour of the confirmation of the hypothesis that the stable development of the financial system in advanced economies, generates a gradual increase the role of long-term debt and perpetuates its own sources of financing of agricultural enterprises