FACTOR ANALYSIS OF FINANCIAL STANDING OF THE SHANGHAI COOPERATION ORGANISATION MEMBER STATES

the financial position of the Shanghai Cooperation Organisation nations. Objectives This research represents factor analysis of trends in the financial standing of the Shanghai Cooperation Organisation countries and assesses an increment in a set of interdependencies with subsequent polynomial approximation. Methods We draw upon fundamental principles of the factor analysis theory and practice, laws of economic and finance, findings of scholarly studies into the equilibrium and non-equilibrium development of global economy and world order by country. Results We identify countries demonstrating high and low growth rates of inderdependencies and high and low instability in terms of absolute peak values. Conclusions and Relevance Analyzing the 2006–2016 period, we capture high growth rates in Tajikistan (liquid bank reserves to assets ratio), Kyrgyzstan (extensive money supply, inflation, consumer prices), Kazakhstan (foreign exchange rate), Uzbekistan (deflator), Russia (loan interest rate for the private sector), China (national trading companies), and high absolute peak values of instability in Kazakhstan (liquid bank reserves to assets ratio), Tajikistan (extensive money supply), India (foreign exchange rate), Russia (deflator, national trading companies), China (inflation, consumer prices), Kyrgyzstan (loan interest rates for the private sector). The findings would be useful in outlining and adjusting the international policy and foreign trade with the Shanghai Cooperation Organisation countries and improving the implementation mechanisms.


Introduction
Intensifying † competition and rearrangements in the global economic leadership necessitate finding † For the source article, please refer to: Смирнов В.В., Мулендеева А.В. Факторный анализ динамики финансовой состоятельности стран Шанхайской организации сотрудничества. Экономический анализ: теория и практика. 2018. Т. 17. № 8. С. 1545-1563. URL: https://doi.org/10.24891/ea. 17.8.1545 modern and effective options of international cooperation. An international cooperation organization should continuously and constantly monitor how its capabilities are formed and subsequently exercised as its pursues its interests in the ever changing global environment and fierce competition. Evaluating and subsequently analyzing such capabilities, the international cooperation organization revises Factor analysis is quite a popular and frequent technique the Russian researchers resort to in order to evaluate the performance and development of business entities in certain economic systems [1, p. 4], analyze the solvency of borrowers [2, p. 4], build econometric models to review the current tendencies and forecast the future scenarios [3, p. 18], impact of sustainable development factors on the effectiveness of the investment decision making process [4, p. 48]. This technique is also deployed to forge a set of indicators and apply them to evaluate capabilities [5, p. 154 Analysis of financial dynamics in the Shanghai Cooperation Organisation member States (SCO countries) [16, p. 272; 17, p. 214; 18, p. 197; 19, p. 263; 20, p. 185] includes an evaluation of growth rates of financial and economic interdependencies, such as the liquid bank reserves to assets ratio, extensive money supply, foreign exchange rate, deflator, inflation (consumer prices), loan interest rate (private sector), national trading companies.
Analyzing the financial position of the SCO countries (India, Kazakhstan, Kyrgyzstan, China, Pakistan, Russia, Tajikistan, Uzbekistan) in terms of growth rates (GR) of financial and economic interdependencies, we use indicators in the related time series with subsequent polynomial approximation, which is best fit to describe frequently changing values for analyzing diverse combinations of unstable factors. Polynomial approximation involves the power of six that cannot have more than five peaks, being sufficient for the analyzable period of time.

GR Analysis of the Liquid Bank Reserves to Assets Ratio
We show results of polynomial approximation of growth rates of the liquid bank reserves to assets ratio in the descending order of their absolute peak values ( Fig. 1): • Kazakhstan: y = 0.0479x 6  These results reveal that Kazakhstan leads in terms of instability of its liquid bank reserves to assets ratio with positive GR. Kyrgyzstan outperforms the other SCO countries in terms of peak values, but has worse GR than Tajikistan and Kazakhstan.

GR Analysis of Extensive Money Supply
We show results of polynomial approximation of growth rates of extensive money supply in the descending order of their absolute peak values ( Fig. 2): • Tajikistan: y = -0.7518x 6

GR Analysis of Foreign Exchange Rate
We show results of polynomial approximation of growth rates of foreign exchange rate in the descending order of their absolute peak values (Fig. 3): • India: y = 0.0092x 6

GR Analysis of the Deflator Index
We show results of polynomial approximation of growth rates of the deflator index in the descending order of their absolute peak values (Fig. 4): • Russia: y = -0.0081x 6 + 0.2914x 5

GR Analysis of Inflation (Consumer Prices)
We show results of polynomial approximation of growth rates of inflation (consumer prices) in the descending order of their absolute peak values (Fig. 5): China demonstrates a more unstable inflation (consumer prices) and high negative GR. Kyrgyzstan has attractive peak values but its GR significantly lags behind the other SCO countries.

GR Analysis of Loan Interest Rate (Private Sector)
We show results of polynomial approximation of growth rates of loan interest rates (private sector) in the descending order of their absolute peak values ( Fig. 6): • Kyrgyzstan: y = -0.013x 6 + 0.4668x 5
Russia's trading companies are more unstable and demonstrate negative GR. Pakistan has more preferable peak values but its GR lags behind those of India, Kazakhstan, China and Russia.

Summary Analysis of Trends in the Financial Position of the Shanghai Cooperation Organisation Member States
Having performed the summary analysis of growth rates of the liquid bank reserves to assets ratio, extensive money supply, foreign exchange rate, deflator index, inflation (consumer prices), national trading companies with subsequent polynomial approximation, we revealed the following trends in the financial position of the SCO countries ( Fig. 1-7

Conclusions
Having analyzed trends in the financial position of the SCO countries and used polynomial approximation of GR of a set of financial and economic interdependencies, we found high GR [2006][2007][2008][2009][2010][2011][2012][2013][2014][2015][2016] in Tajikistan (the liquid bank reserves to assets ratio), Kyrgyzstan (extensive money supply, inflation (consumer prices)), Kazakhstan (foreign exchange rate), Uzbekistan (deflator index), Russia (loan interest rate (private sector)), China (national trading companies) and high absolute peak values of instability in Kazakhstan (the liquid bank reserves to assets ratio), Tajikistan (extensive money supply), India (foreign exchange rate), Russia (deflator index, national trading companies), China (inflation (consumer prices)), Kyrgyzstan (loan interest rate (private sector)).
Having focused on the financial position of the SCO countries and evaluated GR with subsequent polynomial approximation, we recorded high