A STRUCTURAL-LOGICAL MODEL OF THE MECHANISM OF INVESTMENT BY RETAIL INVESTORS IN THE CONTEXT OF EUROPEAN INTEGRATION

Abstract

This article justifies the need to develop a structural-logical model of the retail investor investment mechanism as a response to the challenges of European integration and the low level of household savings channeled into Ukraine’s financial markets. The current state of retail investor participation is analyzed, key barriers are identified, and European regulatory standards subject to implementation are outlined. The functional elements of the proposed model are systematized, including actors, objects, direct and reverse linkages, risk management tools, and information and communication channels. The logic of interaction between retail investors, financial intermediaries, regulators, and issuers in the context of digitalization and heightened transparency requirements is substantiated. Practical recommendations for implementing the model are proposed, taking into account investors’ behavioral characteristics and the limited capacity for state protection during the transition period of European integration. The purpose of this article is to provide a theoretical justification and develop a structural-logical model of the investment mechanism for retail investors, adapted to the challenges and requirements of the European integration process in Ukraine. The methodological framework of the article consists of a set of general scientific and specialized methods, including systemic-structural analysis for model construction, a normative method for studying European regulatory standards, comparative analysis for the implementation of EU rules into national legislation, as well as a method of modeling and structural-logical generalization for the formation of a comprehensive mechanism for retail investors’ investment. As a result of the study, a structural-logical model of the retail investor investment mechanism was developed, which integrates key European regulatory standards into Ukrainian practice. The main barriers to retail investor participation in Ukraine’s financial market were identified, including currency restrictions, the underdevelopment of the corporate securities market, and the population’s low level of financial literacy. The functional elements of the model that ensure the integrity of the investment process were systematized. The logic of interaction among participants in the investment process in the context of market digitalization and stricter requirements for information transparency is revealed. Practical recommendations are provided for implementing the developed model, including the introduction of phased access to high-risk instruments, a mechanism for partial investment guarantees, and the institution of a digital ombudsman for pre-litigation dispute resolution. Future research should focus on developing a quantitative model to assess the impact of implemented European standards on the behavioral patterns of retail investors and on adapting investment protection mechanisms to the conditions of martial law.