Shadow Economy and its Impact on Demand at the Investment Market of the Country


Objective: The objective of this research is to study the link between the drivers of  the shadow economy and demand level at the investment market.

Research Design & Methods: Based on the Shapiro-Wilk test, the normality of capital investment volumes distribution and European Union Countries’ and Ukraine’s shadow economy level are evaluated. Spearman and Shapiro-Wilk tests are used to identify the most relevant indicators of impact.

Findings: Based on the calculations of the standard error, significance criterion of the defined regression equation parameters the empiric econometric model of the regression equation regarding the capital investment dependence on their formation factors at the investment market is formed. The analysis regarding dynamics of the capital investment volumes and shadow economy level change in Ukraine and European Union Countries’ during 2010-2016, shows that there is an inverse link between them – the shadow economy growth has a negative impact on the capital investment volume.

Implications & Recommendations: This research proves the significant influence of the shadow economy on the demand level at the investment market. The results of the study underline the necessity to review the current state policy regarding stimulation of the demand at the investment market from the viewpoint of the most relevant shadow drivers.

Contribution & Value Added: The scientific contribution of the paper is that existing research on the impact of shadow economy on the level of economic development of the countries remains fragmented, as well as studies assessing its effect on the country's investment attractiveness. The econometric model constructed may provide some insight into better understanding of the most influential factors affecting the country's investment attractiveness and the immediate response to it.


shadow economy; investment activities; money laundering; legalistaion; corruption

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Published : 2019-06-28

Bilan, Y., Vasylieva, T., Lyeonov, S., & Tiutiunyk, I. (2019). Shadow Economy and its Impact on Demand at the Investment Market of the Country. Entrepreneurial Business and Economics Review, 7(2).

Yuriy Bilan
Rzeszów University of Technology  Poland
Tatiana Vasylieva 
Sumy State University  Ukraine
Sergij Lyeonov 
Sumy State University  Ukraine
Inna Tiutiunyk 
Sumy State University  Ukraine

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