Shadow liquid capital, recapitalization of the economy and anti-money laundering

Introduction. The scale of losses from the war significantly exceeds the financial capabilities of the state and the banking sector, which necessitates the search for sources of recapitalization of the economy. One of these sources can be the shadow capital, the identification of factors that stimulate their reinvestment in the recovery of Ukraine is an urgent scientific task. Problem Statement. Scientific literature in the field of the shadow economy identifies it as the share of shadow income in GDP, leaving out the accumulation of shadow capitals. There is a lack of a scientifically based approach to assessing the amount of such capital and determining the factors of their reinvestment in the economy. The problem acquires special importance against the background of the long war against Ukraine and the significant scale of financing necessary for the economic recovery. The purpose of the study is to determine the potential volumes of shadow liquid capital, to study the factors affecting their circulation and to outline, on this basis, the conceptual framework for activating their reinvestment in the economy of Ukraine. Methods. Amounts of accumulated shadow liquid capital are determined by the combination of direct and indirect methods. To take into account the peculiarities of business financing in Ukraine, which consist in the replacement of equity capital with quasi-debts, investment volumes are calculated as the sum of loan and equity capital flows. The relationship between investment volumes presented in the format of a share of GDP and classical factors of influence on investment activity (expected weighted average cost of capital and country risk premium) is investigated. Results. Algorithms for calculation have been developed and trends in the circulation of shadow liquid capital, which are only partially explained by the country risk premium (CRP), have been summarized. Additional explanations for the relative weakness of such a relationship were found - idiosyncratic risks inherent in non-financial business, awareness of the peculiarities of doing business, additional costs for compliance with anti-money laundering legislation, the influence of individual components of political risk - “external conflict" and “government stability". Conclusions. Shadow capital can play an important role in financing recovery of the economy, provided that systematic risk is reduced and this task is identified as a priority in the strategy of detinization of the economy. Promising directions of research are the formalization and implementation in systematic risk premium the additional factors of investment of shadow capitals.