PARTICIPATORY BUDGETING IN THE CONTEXT OF BEHAVIOURAL FINANCES

Abstract

Analysis results of the processes of the authorities' decentralization and financial autonomy strengthening of the local self-government in Ukraine proved the necessity and expediency of applying the concept of behavioural finance in the study of modern trends in participatory budgeting at the level of territorial communities. The aim of the research is the development of theoretical and methodological foundations, provisions, practical approaches to participatory budgeting and justification of directions for its development and improvement in the context of behavioural finance. The main results of the study. The content of participatory budgeting as the essence of management actions and procedures used by subjects of public administration regarding formation, distribution and use of budget resources for the project's implementation initiated by the public is substantiated. The algorithm of the participatory budgeting practice at the level of the territorial community is shown. The factors affecting the number of financial resources aimed at the formation of a participatory budget were identified and the corresponding economic and mathematical model was proposed. The practice of using participatory budgeting in Ukraine at the level of territorial communities was analysed and a number of problems were identified, among which the most important is the choice of distribution directions, the use of participatory budget resources and their optimization criteria. A scientific approach to optimizing participatory budget expenditures using economic-mathematical modelling has been developed. The advantages of participatory budgeting are outlined, problems are identified and approaches to their solution are proposed in the context of behavioural finance, which should be taken into account by public administration bodies when drawing up and implementing a participatory budget. A theoretical approach to revealing the essence of participatory budgeting has been formed, taking into account various aspects, in particular, the procedures for the formation, distribution and use of funds intended for the project's implementation, initiated by the public. As a result of the factor analysis, three-factor models, which reflect the system of influencing factors on the formation of financial resources directed from local budgets to the participatory budget, were obtained. The problems of participatory budgets functioning at different levels of the budget system are identified and the ways of solving them in the context of behavioural finance are substantiated. A scientific approach to building a participatory budget expenditure optimization model is proposed, on the basis of which it is possible to calculate the optimal set of projects initiated by the public.