The impact of martial law on financial stability and bankruptcy risks of enterprises in Ukraine

Abstract

This article examines the factors contributing to financial destabilisation and the distinctive features of Ukrainian business operations under conditions of full-scale military aggression. The author analyses macroeconomic challenges that have precipitated a sharp deterioration in business conditions, including the destruction of production and transport infrastructure, blockade of logistical routes, rapid inflation, and declining household purchasing power. Particular attention is devoted to emerging risk categories, notably energy-related and workforce-related vulnerabilities. Special emphasis is placed on sector-specific financial risks. It is demonstrated that the trade, manufacturing, and construction sectors have experienced the most severe pressure, manifested in sharp declines in liquidity and elevated financial leverage. The paper explores business adaptation mechanisms to crisis conditions, including relocation processes, digital transformation of business models, and reorientation towards European export markets. A distinct focus is given to bankruptcy case dynamics. Despite an overall reduction in judicial proceedings during 2022–2023 due to constraints on court system functionality, 2024 has witnessed a rising trend in court rulings declaring entities bankrupt. This pattern indicates the accumulation of financial difficulties and the depletion of internal resilience reserves. The highest proportion of bankruptcies is concentrated in trade, manufacturing, and agriculture. It is substantiated that the adaptation of business models, initiated in 2023–2024, has partially stabilised the number of economic entities; however, risk levels remain elevated owing to inflationary pressures and limited access to credit facilities. The author argues for the necessity of systematic anti-crisis management grounded in the formation of liquidity reserves, mobilisation of international financial assistance, and implementation of innovative financial stabilisation models. A systemic approach to restoring solvency—combining innovative managerial solutions with active fiscal policy—constitutes a fundamental prerequisite for the long-term stability and competitiveness of the national economy in the post-war period. This article holds practical significance for developing business survival strategies amid prolonged military-political uncertainty.