A conceptual framework to apply financial engineering at the enterprise

Abstract

The development and continuous complication of financial instruments through the integration of technology and management methods lead to an increasing role of financial engineering to ensure the efficient activity of enterprises. The use of financial engineering at the present stage allows business entities to comprehensively solve the most pressing problems, from the liquidity crisis and to the lack of resources to implement long-term goals. In view of the fact, this direction of research has not yet received wide distribution in the domestic scientific literature. Thus, the definition of the conceptual foundations for the functioning of the financial engineering system in combination with the refinement of its essential characteristics is an urgent scientific task. The purpose of the article. The article aims to justify the conceptual provisions of financial engineering as an independent scientific and practical direction of economic research. Methodology. Methodological principles on which the study is based contain the application of a set of universal scientific methods and specific methods of scientific knowledge, including: the method of scientific abstraction in determining the characteristics of the innovative component of financial engineering; the method of system-structural analysis in justifying the diagnostic functions of the financial engineering of an enterprise, and the method of analysing time series when assessing the development of the options market in Ukraine. Value/originality. The article describes the essence of financial engineering. It is substantiated that financial engineering is to create innovations in the form of financial products, processes, technologies, and institutions in order to obtain financial benefits from their practical use in the activities of the enterprise. The fundamental difference between the concepts of “financial management” and “financial engineering” is disclosed. The characteristics and theoretical significance of financial engineering as independent scientific and practical areas of economic research are analysed. Modern approaches to the definition of objects, methods, information base, and the results of financial engineering are systematized. Financial engineering is considered as the process of designing, developing, and implementing innovative financial instruments. The characteristic of using financial engineering is given on the example of options trading. The features of the development of the options market in Ukraine are analysed. It was determined that the development of the domestic options market requires first of all the formation of practical skills in the use of derivative financial instruments by financial engineering methods