Financial and Credit Regulation as a Tool for Attracting Investments in Tourism and the Hotel and Restaurant Business of Ukraine

This research investigates into the significant role of financial and credit regulations in promoting investments within Ukraine’s tourism sector, with a specific emphasis on the hotel and restaurant industry. By integrating mathematical modelling and empirical data analysis, the study uncovers how regulatory environments and credit accessibility jointly influence investment decisions. The development of a differential equation model quantitatively reveals that measures aimed at regulatory simplification and enhancing credit conditions are closely linked with increased investment levels. It identifies critical thresholds for regulatory simplification and credit availability, where indices exceeding 0.45 and 0.55, respectively, are associated with substantial growth in investment rates. This assertion is substantiated by empirical evidence from a survey of 250 industry stakeholders, highlighting the significant positive effects of these regulatory and financial adjustments on investment intentions. The findings highlight the necessity of precise financial and credit regulatory reforms to improve Ukraine’s tourism investment climate. The practical significance of this research lies in its potential to guide policy formulation aimed at unlocking the investment potential of Ukraine’s tourism sector, ensuring its growth and sustainability in the global context


INTRODUCTION
In the dynamic landscape of global tourism, the sector stands as a critical pillar for economic development, job creation, and cultural exchange.Among emerging markets, Ukraine's tourism sector, particularly the hotel and restaurant industry, harbours significant potential for growth and development (Josiassen et al., 2023).This potential, however, remains underexploited due to a complex array of challenges, notably in the realm of financial and credit regulations.The current study investigates this critical issue, aiming to unravel how financial and credit regulation can act as a pivotal tool for attracting investments into Ukraine's burgeoning tourism sector.
Ukraine, with its rich cultural heritage, diverse landscapes, and strategic geographic location, is poised to become a leading tourist destination (Hlynskyy and Hirna, 2022).Despite these advantages, the sector has historically grappled with inadequate investment levels, hindering its ability to fully capitalize on its tourism potential.A significant factor contributing to this investment shortfall has been identified as the stringent and oftentimes opaque financial and credit regulatory environment (Fisher, 2020).These This Journal is licensed under a Creative Commons Attribution 4.0 International License regulations, encompassing banking laws, monetary policies, and credit accessibility issues, have been cited as major impediments to the flow of domestic and international investment into the sector.The importance of tourism to Ukraine's economy cannot be overstated.Beyond its direct economic contributions, the sector plays a vital role in promoting cultural heritage, improving regional development, and fostering international goodwill (Gustafsson and Lazzaro, 2021).As such, understanding and addressing the barriers to investment within this sector is of paramount importance.
This study aims to bridge the gap in the literature by offering a comprehensive analysis of how financial and credit regulations influence investment decisions in Ukraine's hotel and restaurant industry.By employing a mixed-methods approach, including mathematical modelling and empirical data analysis, the research seeks to identify the regulatory bottlenecks that stifle investment and propose actionable solutions to overcome these challenges.The objectives of this study are twofold.First, it aims to develop a theoretical framework that clarifies the relationship between financial and credit regulations and investment in the tourism sector.Second, it seeks to empirically validate this framework using data collected from industry stakeholders, thereby offering evidence-based insights into the regulatory reforms necessary to enhance investment attractiveness.
As Ukraine stands at a crossroads, with the opportunity to significantly boost its tourism sector, this study provides timely and critical insights.By aligning regulatory frameworks with market needs and enhancing credit accessibility, the country can unlock a new era of growth and prosperity for its tourism industry.This research not only contributes to the academic discourse on financial regulation and tourism investment but also serves as a practical guide for policymakers, financial institutions, and investors aiming to foster a prosperous tourism sector in Ukraine.
The overarching goal of this research is to elucidate the complex dynamics between financial and credit regulations and their impact on investment flows within Ukraine's tourism sector, particularly focusing on the hotel and restaurant industry.To achieve this objective, the study is designed around three primary aims: 1. Create a comprehensive mathematical model to understand the relationship between financial regulations and investment in Ukraine's tourism sector 2. Gather survey data from industry stakeholders to validate the model's predictions and refine it as necessary 3. Provide actionable policy recommendations to enhance the investment climate in Ukraine's tourism sector, focusing on optimizing financial and credit regulations for growth in the hotel and restaurant industry.

LITERATURE REVIEW
The role of financial regulations and credit availability in shaping investment landscapes, particularly in the tourism sector, has been a subject of extensive academic inquiry.This literature review synthesizes findings from various studies to clarify the relationship between these financial factors and tourism investment, while also identifying gaps in the context of Ukraine's hotel and restaurant industry.Financial regulations, constituting an amalgamation of banking laws, securities regulations, and monetary policies, serve as the bedrock for facilitating or hindering investments within an economy (Hofmann, 2023).These regulations are instrumental in shaping the investment landscape by influencing key financial metrics such as the cost of capital, investment risk profiles, and the main attractiveness of various sectors to investors.In tourism a sector inherently capital-intensive and reliant on long-term stability and predictability-these financial regulations assume a critical role (McKellar, 2023).They not only dictate the feasibility and profitability of investments in tourism infrastructure, including hotels, resorts, and restaurants but also impact the sector's ability to draw investment from both domestic and international sources.
Deregulation efforts within the banking sector were closely observed for their impact on the tourism industry in Greece (Gourzis et al., 2023).Before these reforms, Greece's tourism sector, much like Ukraine's today, was characterized by a challenging investment environment, with high borrowing costs and limited access to credit stifling growth and development (Ngcobo et al., 2023).This research illuminated how the relaxation of banking regulations-specifically, those governing lending practices and interest rate policies played a pivotal role in enhancing the availability of credit.The increase in credit availability was directly linked to a surge in investments across the tourism sector.Developers and entrepreneurs, previously constrained by financial bottlenecks, found new opportunities to embark on projects aimed at enhancing the tourism infrastructure (Allioui and Mourdi, 2023).The construction of new hotels, the renovation of existing resorts, and the expansion of tourist facilities were noted, contributing to a broader economic uplift within the sector.In the South Korean context, modifications in the regulatory framework concerning foreign direct investment (FDI) in the tourism sector had pronounced effects (Driffield et al., 2021).The South Korean government's strategic decision to ease restrictions on FDI, particularly in designated special tourism zones, was aimed at attracting international investors to a sector seen as vital for the country's economic expansion (Ahn, 2023).
This policy shift facilitated a notable increase in foreign investments, channeling capital into the development of worldclass tourism and leisure facilities (Tung, 2020).The establishment of these zones not only provided a conducive environment for investment but also showcased the potential for regulatory reforms to attract substantial foreign capital.The success of these areas can be attributed to a holistic approach that combines regulatory ease, investment incentives, and infrastructural support, thereby significantly enhancing the sector's attractiveness to foreign investors.The South Korean example provides valuable insights into the mechanisms through which regulatory adjustments can be leveraged to stimulate investment in tourism infrastructure, thereby driving sectoral growth.These cases from Greece and South Korea offer critical lessons for Ukraine, particularly in the context of its efforts to revitalize the hotel and restaurant segments of its tourism sector.The experiences of these nations highlight the importance of creating a regulatory environment that facilitates easy access to credit and invites foreign direct investment.For Ukraine, addressing the financial and regulatory barriers that currently impede the flow of investments into tourism could unlock significant economic benefits, fostering growth, employment, and regional development.
There are certain principles of the SMART economy, with its implementation challenges and prospects amidst globalization, digitalization, and technological advancements (Redko et al., 2023).Drawing from 20 scholarly works, the study compares current economic trends with historical developments, highlighting the transformative potential of SMART specialization in driving long-term structural changes at regional and national levels.
The authors advocate for an enhanced approach to economic development through SMART specialization, offering valuable insights into the future trajectory of economies.Digital transformation has crucial role in modern economic development (Petrova et al., 2022).It distinguishes digital transformation from automation and digitalization and identifies key elements of a digital transformation strategy.Through analysis of global and national experiences, the research underscores the importance of digital transformation for both businesses and state authorities.
The findings highlight the need for accurate definition and implementation of digital transformation strategies to intensify digital development and address omissions in strategy formulation.
The study positions digital transformation as a strategic imperative for businesses and the broader economic environment.By drawing on these insights, Ukraine can formulate strategies to enhance the attractiveness of its tourism industry to both domestic and international investors, thereby catalyzing investment in the hotel and restaurant industry-a critical component of its broader tourism ecosystem.
Credit availability, signifying the ease with which businesses, especially those in the capital-intensive tourism sector, can access loans, stands as a pivotal determinant of investment decisions (Wen and Jiang, 2023).The importance of credit accessibility is particularly pronounced in the tourism industry due to the significant upfront capital investments required for developing hotels, restaurants, and other tourist facilities (Pfammatter et al., 2024).Access to credit enables these businesses to navigate the initial financial hurdles, supporting infrastructure development that is critical for attracting tourists.Malaysia has boost investment in its tourism sector through enhanced lending practices and the introduction of tourism-specific financial products (Seow et al., 2021).Malaysia recognized early on that traditional lending models did not adequately cater to the unique needs of the tourism sector, where the return on investment could be long-term and influenced by factors outside the control of individual businesses, such as international tourist flows and economic conditions (Farber and Taylor 2023).
By adapting lending practices and introducing financial products tailored to the tourism industry's needs, Malaysian banks were able to reduce the barriers to credit for businesses in the sector.These products often featured more favourable terms, including lower interest rates and longer repayment periods, reflecting the specific risk profiles and cash flow patterns of tourism-related businesses (Hassan et al., 2023).The impact of these changes was significant, leading to a noticeable uptick in investments, particularly in the hotel and restaurant segments, which are critical to the tourism value chain.This approach not only facilitated the expansion of existing businesses but also encouraged the establishment of new ventures, contributing to the overall growth of Malaysia's tourism industry.Otonne et al. (2023)  Drawing from 23 sources, the study underscores the need for balanced government regulation to prevent market imbalances.
While acknowledging the importance of mortgage lending for improving housing conditions, especially in the context of limited access to capital, the research highlights the challenges posed by the COVID-19 pandemic and evolving bank regulations.The conclusions emphasize the intertwined nature of mortgage lending development with the economic state of Uzbekistan, with the government playing a pivotal role in fostering a free market of mortgage services within the banking system.
E-businesses have impacted entrepreneurship development amidst the COVID-19 pandemic across various sectors and countries (Verbivska et al., 2022).Through panel analysis of data from 212 companies in Ukraine, Bulgaria, Poland, Moldova, and Georgia, the research highlights the significance of e-business platforms in maintaining business performance during crises.Findings reveal increased online income in sectors like trade, IT, and pharmacy, with a growing emphasis on expanding communication networks with customers.Moreover, effective equity financing and liquidity management are identified as critical for enhancing economic performance in terms of return on equity and return on assets.COVID-19 pandemic has profoundly impacted household expenditures in Central and Eastern Europe, leading to reduced income and expenditure patterns (Vilchynska et al., 2023).This study analyzes household performance indicators from 2017 to 2021, focusing on the period 2019-2021 when COVID-19 incidence increased.Findings suggest that households experienced decreased income and reduced expenditures, prioritizing savings over investment.Expenditure reorientation included cuts in spending on recreation, culture, dining, clothing, transportation, utilities, housing, and food.Education costs remained unchanged.
In the near term, household costs are expected to decrease further, potentially affecting GDP structure.
The comparative study underscores the critical role of credit availability, focusing on its impact across several Latin American countries (Tecel et al., 2020).This research highlighted a clear correlation between favorable credit conditions for small and medium enterprises (SMEs) and heightened levels of investment in tourism.The study's findings are particularly relevant given the dominance of SMEs in the tourism sector, which often face greater challenges in securing financing compared to larger corporations.
Countries within Latin America that implemented policies to improve credit access for SMEs, including streamlined loan application processes, government-backed loan guarantees, and financial education programs, saw a marked increase in tourism investments (Rudolph et al., 2022).These investments were distributed across a range of tourism-related activities but were particularly impactful in the hotel and restaurant sectors, which are pivotal for enhancing a country's tourism appeal and capacity.
The significance of these findings lies in their demonstration of how tailored financial products and supportive credit conditions can catalyze investment in the tourism sector (Ranger et al., 2021).By acknowledging and addressing the unique financial needs and challenges faced by SMEs within this sector, countries can foster an environment conducive to growth and development (Umadia and Kasztelnik, 2020).The insights from Malaysia and Latin America have profound implications for Ukraine, emphasizing the necessity of adapting credit policies to meet the specific needs of the tourism sector.Enhancing credit availability through the development of tourism-specific financial products and supportive lending practices could serve as a critical lever for Ukraine to unlock investment in its hotel and restaurant industry.(Vovchak et al., 2022).Using econometric methods, the research analyzes the impact of the pandemic on tourism activities in Ukrainian regions.Statistical data from 24 regions were utilized to construct regression equations and assess model quality.The findings reveal a significant decrease in financial and economic indicators across all regions in 2020, with a strong correlation between these indicators and COVID-19 deaths.By learning from these international examples, Ukraine can take strategic steps towards cultivating a robust tourism sector, characterized by vibrant growth and sustained investment in key infrastructure.
The strategic implementation of financial and credit regulatory reforms in emerging markets has demonstrated significant success in attracting investments to the tourism sector (Gong and Chen, 2023).These reforms, tailored to the unique needs of the tourism industry, have facilitated a more conducive investment climate, particularly benefitting the hotel and restaurant sectors.The experiences of Rwanda and Vietnam provide insightful examples of how targeted policy adjustments can stimulate investment and growth in tourism.Rwanda's approach to enhancing its tourism sector's investment appeal has been multifaceted, focusing on both regulatory reforms and the provision of incentives to potential investors (Mutanga et al., 2024).As noted by Mihigo and Lukenangula (2023) the Rwandan government undertook significant steps to streamline business registration processes, making it easier and faster for investors to start tourism-related businesses.This reduction in bureaucratic hurdles is crucial in an industry where the speed of business setup can significantly impact the sector's attractiveness.
In addition to process streamlining, Rwanda introduced tax incentives specifically designed for tourism-related businesses.These incentives included reduced tax rates and tax holidays, aimed at lowering the initial financial burden on new investments (Alphonse et al., 2023).Such fiscal measures, when combined with the government's initiatives to improve access to credit, have played a pivotal role in creating a supportive environment for investors.The results of these efforts have been particularly evident in the hotel and restaurant sectors, which have seen a surge in investments.New establishments have been developed, and existing ones have expanded, significantly enhancing Rwanda's tourism infrastructure and capacity.These developments not only contribute to the country's GDP but also create employment opportunities and support ancillary businesses.liberalization is particularly appealing to international investors, who often consider currency stability and convertibility as critical factors in their investment decisions (Ho, 2023).Moreover, Vietnam has focused on improving its credit information systems, making it simpler for investors to access credit and for banks to assess the creditworthiness of businesses.By enhancing the transparency and reliability of credit information, Vietnam has addressed a significant barrier to credit access for tourism businesses, facilitating easier financing for projects in the hotel and restaurant sectors (Nguyen et al., 2024).These comprehensive financial reforms have had a substantial impact on foreign investment in Vietnam's tourism sector.By creating a more attractive and stable investment environment, Vietnam has been able to draw significant foreign capital into its tourism infrastructure, contributing to robust growth in the sector (Tam, 2023).
The experiences of Rwanda and Vietnam offer valuable lessons for other emerging markets, including Ukraine, seeking to enhance investment in their tourism sectors.By streamlining business processes, offering targeted incentives, and implementing comprehensive financial reforms, countries can significantly improve the investment climate for tourism.Such measures, particularly when focused on easing access to credit and reducing regulatory burdens, can lead to substantial growth in the hotel and restaurant sectors, driving overall development in the tourism industry.The existing body of literature on the nexus between financial regulations, credit availability, and tourism investment offers a wealth of insights and empirical evidence from various global contexts.These studies collectively affirm the significant influence of financial and credit policies on facilitating or impeding investment in the tourism sector, particularly in the realms of hotel and restaurant development.However, a closer examination of this corpus reveals conspicuous gaps, especially regarding the specific context of Ukraine-a country with a burgeoning tourism potential yet facing unique challenges in attracting investment to its hotel and restaurant industry.
One of the most notable gaps is the lack of research focusing on Ukraine's distinct socio-economic and regulatory environment.While studies have explored the impact of financial and credit policies on tourism investment in other emerging markets, the peculiarities of Ukraine's situation-ranging from its post-Soviet economic transition to its ongoing efforts to integrate with European markets-demand tailored analysis.Ukraine's hotel and restaurant industry presents a unique blend of challenges and opportunities that are not fully addressed in the broader literature.These include issues related to land use, property rights, and the regulatory framework governing foreign direct investment and SME financing.Additionally, the literature has predominantly concentrated on national-level policies and macroeconomic factors, often overlooking the micro-level regulatory issues that directly impact investors and operators within the tourism sector.This oversight is significant because the success of tourism investments frequently hinges on these micro-level factors, including local zoning laws, environmental regulations, and municipal business licensing procedures.For Ukraine, understanding and addressing these micro-level regulatory issues is crucial for creating a more investor-friendly environment, particularly for SMEs, which constitute a significant portion of the country's hotel and restaurant sector.There is a pressing need for more granular research that delves into the specific financial and credit-related hurdles faced by tourism businesses in Ukraine.Such research should aim to dissect the various layers of financial and regulatory challenges, from high-interest rates and restrictive lending criteria to bureaucratic red tape and inconsistent regulatory enforcement.By focusing on these detailed aspects, research can provide nuanced insights into the barriers that deter investment in Ukraine's tourism infrastructure and offer targeted recommendations for overcoming these obstacles.

METHODS
This study employs a mixed-methods approach, combining mathematical modelling with empirical analysis to investigate the impact of financial and credit regulations on investment in Ukraine's tourism sector, specifically within the hotel and restaurant industry.To understand the dynamic interplay between regulatory changes, credit availability, and investment levels in the tourism sector, differential equation model is developed.The essence of this model lies in capturing the continuous interaction and feedback mechanism between regulatory frameworks (R), credit accessibility (C), and the consequent investment levels (I) over time.The model is represented as: Here, dI dt symbolizes the rate of change of investment in the tourism sector over time.The function f (R,C) defines the relationship between regulation (R) and credit availability (C) as it impacts investment growth.The model assumes that both regulatory changes and credit availability independently and jointly influence investment levels, with their interaction potentially exhibiting non-linear characteristics.Regulatory Changes (R) encompasses a range of policy adjustments, including but not limited to, changes in licensing requirements, tax policies, and specific tourism-related regulations that might affect investment decisions.Credit Availability (C) reflects the ease with which businesses in the tourism sector can access financing, including factors like interest rates, loan terms, and the availability of specialized financial products tailored to the tourism industry.
A survey was conducted among 250 stakeholders in Ukraine's hotel and restaurant industry.The sample includes a diverse range of participants, from small business owners to executives of larger hospitality chains, providing a comprehensive overview of the industry's perspective.Survey questions were designed to gather insights on Perceived regulatory barriers and their impact on investment decisions.Access to credit and the effectiveness of current financial products in meeting the needs of the tourism sector.Investment intentions and the factors influencing these decisions, including market demand and location attractiveness.
To empirically validate the mathematical model, regression analysis was utlilzed to examine the relationship between investment levels (dependent variable) and a set of independent variables representing regulatory and credit conditions, along with other relevant factors: I represent the volume of investments made in the tourism sector over a specified period.Investment levels can include both capital investments in new projects (e.g., construction of hotels, resorts, restaurants) and reinvestments or expansions of existing businesses.Tracking investment levels provides insight into the sector's growth dynamics, indicating investor confidence, the attractiveness of the sector, and the potential for future development and profitability.R represent Regulatory environment index, which is a composite measure that quantifies the ease or complexity of the regulatory frameworks governing the tourism sector.This index may consider factors such as the number of procedures required to start a business, the time and cost involved in obtaining necessary licenses, and the perceived transparency and predictability of regulatory actions.A more favorable (lower) index score suggests a environment that is conducive to business, potentially leading to higher investment levels.It reflects how government policies and regulatory practices can either facilitate or hinder investment decisions.C represents the Credit availability index, which measures the accessibility of financial resources for tourism-related investments, encompassing aspects such as interest rates, loan terms, and the presence of specialized financial products designed for the tourism industry.Credit availability is crucial for financing new projects and for the expansion of existing operations in the tourism sector.An index reflecting greater ease of credit access indicates a financial environment supportive of sector growth, enabling businesses to leverage opportunities more readily.
D represent Demand in the tourism market and captures the existing and projected customer base for the tourism sector, encompassing both domestic and international tourists.It reflects the market demand trends, including seasonality, tourist preferences, and spending patterns.Understanding market demand is vital for investment decisions, as it directly influences the potential revenue and profitability of tourism-related ventures.
High or growing demand can signal profitable investment opportunities, encouraging more significant investments in the sector.L refers to the desirability of specific locations within Ukraine for tourism investments, considering factors such as tourism traffic (visitor numbers), the quality and availability of infrastructure (transport, utilities, etc.), and the presence of natural or cultural attractions.Locations with high attractiveness scores are likely to draw more investments due to their higher potential for visitor footfall and revenue generation.This variable helps investors identify geographic areas with the best prospects for success in the tourism sector.Location attractiveness reflects the desirability of specific locations for investment based on factors like tourism traffic, infrastructure, and natural or cultural attractions.ϵ represents the Error term, accounting for unobserved factors affecting investment levels.

RESULTS
This mixed-methods approach, integrating a differential equation model with empirical survey data and regression analysis, is designed to provide a comprehensive understanding of the factors influencing investment in Ukraine's tourism sector.By explaining the specific roles of financial and credit regulations, this study aims to offer actionable insights for policymakers and stakeholders to foster a more conducive investment environment in the hotel and restaurant industry.These variables collectively provide a comprehensive framework for analyzing the determinants of investment in the tourism sector.By examining the interplay between regulatory conditions, financial access, market demand, and location-specific factors, the study aims to offer insights into how to enhance the attractiveness of Ukraine's tourism industry to investors.A detailed mathematical model that employs differential equations to demonstrate the relationship among regulatory changes (R), credit availability (C), and investment levels (I) in the tourism sector involves setting up equations to present potentially non-linear interactions between these variables.
Represents the rate of change of investment in the tourism sector over time.

Assumptions for the Model
1. Regulatory Changes (R) impact investment both positively and negatively, depending on whether they simplify or complicate the investment process.

Credit Availability (C) has a generally positive effect on
investment, with more accessible and affordable credit boosting investment levels.3. The relationship between R, C, and I is non-linear, with diminishing returns on investment growth as regulatory simplification and credit availability increase beyond certain points.

dI dt aR bR cC dC eRC 2 2
Where: a, b, c, d, and e are coefficients that represent the sensitivity of investment to changes in R and C, and the interaction effect between R and C. The terms aR and cC represent the initial positive impact of regulatory simplification and increased credit availability on investment.The terms −bR 2 and −dC 2 introduce the concept of diminishing returns, suggesting that beyond a certain point, further improvements in R and C contribute less to investment growth.
The term eRC represents the interaction effect between R and C, indicating that the impact of credit availability on investment could vary depending on the regulatory context (and vice versa).
The model is simplified to focus on the direct effects of regulatory changes (R) and credit availability (C) without their squared terms and interaction for the sake of demonstration.
where a and c are constants, and R and C are considered constant in terms of time for this simplified solution.I(0) = I 0 represents the initial investment level.

I t aR cC t K ( ) ( )
where K is the constant of integration.
This solution represents the investment level I as a function of time t, given constant rates of regulatory changes R and credit availability C. It suggests that investment grows linearly over time with slopes determined by the impact of regulatory changes and credit availability, starting from an initial investment level I 0 .In this simplified model, investment in the tourism sector increases linearly over time, influenced by the regulatory environment and credit availability.The rate of increase is determined by the coefficients a and c, which quantify the sensitivity of investment to changes in R and C, respectively.The initial investment level I 0 sets the starting point for this growth trajectory.In practice, the relationship between R, C, and I is likely to be more complex, with the potential for non-linear effects and interactions between variables.
For the non-linear relationship between regulatory changes, credit availability, and investment growth, which suggests the existence of an optimal level of regulation and credit availability that maximizes investment growth.To demonstrate how such a model could yield results pointing towards an optimal level of regulation and credit availability, a more complex form of the differential equation that incorporates non-linear terms is considered.It allows to explain scenarios where increasing regulation and credit availability beyond certain points might have diminishing returns or even negative impacts on investment growth.To model the non-linear relationship and identify optimal levels of regulation (R) and credit availability (C), quadratic terms are introduced into the differential equation: Here: a, b, c, and d are positive coefficients.The aR and cC terms represent the positive impacts of regulatory simplification and credit availability on investment, respectively.The −bR 2 and -dC 2 terms represent the diminishing returns or negative impacts of excessive regulation and overly generous credit availability.This model structure implies that initially, increases in R and C contribute positively to investment growth dI dt § © ¨• ¹ ¸, but beyond certain levels, the negative squared terms −bR 2 and -dC 2 dominate, reflecting the principle of diminishing returns and potentially negative effects of over-regulation and excessive credit ease.The optimal levels of R and C are found where the partial derivatives of dI dt concerning R and C are zero: Solving these equations for R and C gives: The solutions R opt and C opt represent the optimal levels of regulation and credit availability that maximize the growth rate of investment in the tourism sector.At these levels, the positive impacts of regulation simplification and credit availability on investment growth are maximized, and the negative impacts of over-regulation and excessive credit ease are avoided.By aiming for R opt and C opt governments can foster an environment that is most conducive to stimulating investment in the tourism sector, balancing the need for sufficient regulation and credit support without overstepping into counterproductive territory.
To provide a detailed results section for the regression analysis that aligns with the hypothetical scenario described, let's create a structure for the presentation of results, including regression tables and interpretation.The analysis aims to confirm the predictions of the mathematical model regarding the impact of regulatory changes and credit availability on investment levels in Ukraine's tourism sector, incorporating control variables to account for other influential factors.

Regression Results
The regression analysis was conducted to empirically test the relationships between regulatory simplification (R), credit availability (C), and investment levels (I) in the tourism sector, while controlling for other variables such as market demand (D) and location attractiveness (L), among others.The model is specified as follows: Market Demand (D) represents the potential customer base and its growth.Location Attractiveness (L): considers the desirability of specific locations for investment.Business Size (BS) is categorized as small, medium, or large; controls the scale of operations.While years of Experience (YE) reflects the length of time the respondent has been involved in the tourism sector.The positive and statistically significant coefficient (0.45) in Table 2 for regulatory simplification suggests that easing regulatory constraints has a substantial impact on increasing investment levels in the tourism sector.This finding supports the theoretical model's assertion that regulatory policies play a crucial role in facilitating investment growth.Credit Availability (C) explains coefficient for credit availability (0.55) is positive and highly significant, indicating that improved access to credit is strongly correlated with higher investment levels.This underscores the importance of financial conditions in driving investment decisions within the sector.

DISCUSSION
The empirical findings from our regression analysis, alongside the outcomes from the mathematical model, provide compelling evidence of the significant impact that financial and credit regulations have on investment decisions in Ukraine's tourism sector.These results highlight the interplay between regulatory simplification, credit availability, and the conducive environment necessary for fostering investment, particularly in the hotel and restaurant industry.The positive correlation between regulatory simplification and investment intentions underscores the importance of streamlined regulations in attracting investment.Simplified procedures, clearer guidelines, and a reduction in bureaucratic hurdles can significantly lower the entry barriers for new investors and facilitate the expansion plans of existing businesses (Khan et al., 2024).For instance, the experience of Rwanda, serves as a pertinent example where efforts to streamline business registration   processes and offer tax incentives have spurred investments in tourism-related infrastructure (Zuo et al., 2023).Similarly, Ukraine can benefit from adopting such regulatory reforms, ensuring that the legal and administrative framework supports rather than impedes the growth of the tourism sector.
The strong positive relationship between credit availability and investment levels emphasizes the critical role of accessible and affordable financing in the tourism industry (Sohail, 2023).
Investments in tourism, particularly in capital-intensive segments like hotels and restaurants, often require significant upfront capital (Wijburg et al., 2024).Enhanced access to credit, through lower interest rates and tailored financial products, can bridge this gap, enabling businesses to undertake new projects and expand their operations (Cumming et al., 2023).The case of Malaysia, where improvements in lending practices led to increased investment in the tourism sector, illustrates the potential impact of such financial reforms.By improving credit conditions, Ukrainian financial institutions can play a pivotal role in catalyzing tourism sector growth (Trusova et al., 2020).
The mathematical model's indication of non-linear relationships and the existence of optimal levels of regulation and credit availability further enrich our understanding.It suggests that while regulatory simplification and enhanced credit access positively affect investment, there is a threshold beyond which their effectiveness may diminish (Zhao et al., 2022).This is a crucial consideration for policymakers, who must balance the need for regulation and financial support without overstepping into counterproductive territory.Drawing on this insight, Ukraine must aim to identify these optimal levels through empirical research and stakeholder consultations, ensuring that policies are finely tuned to maximize investment attraction.
This study offers actionable insights for Ukrainian policymakers and stakeholders in the tourism sector.First, there is a clear need for regulatory reforms aimed at simplifying the legal and administrative processes for tourism investments.This involves not only reducing red tape but also ensuring that regulations are clear, predictable, and supportive of business growth.Second, enhancing credit availability through financial reforms is crucial.This could involve incentivizing banks to offer more favorable loan terms to tourism businesses, developing specialized financial products for the sector, and possibly establishing credit guarantee schemes to reduce lending risks.Lastly, the identification of optimal regulatory and credit conditions presents a strategic opportunity.Policymakers should engage in ongoing research and dialogue with industry stakeholders to continuously refine and adjust policies in response to changing market conditions and investment dynamics.

CONCLUSION
The interplay between financial and credit regulations and investment in the tourism sector presents a nuanced landscape for policymakers, investors, and industry stakeholders.This study has elucidated the pivotal role that these regulatory frameworks play in shaping the investment climate in Ukraine's tourism industry, with a focused lens on the hotel and restaurant segments.Through a combination of mathematical modelling and empirical analysis, significant insights are uncovered explaining how adjustments in financial and credit regulations can serve as powerful levers for attracting investments, fostering economic growth, and enhancing the sector's competitiveness on a global stage.
Findings further reveal a positive correlation between regulatory simplification and investment intentions, underscoring the importance of creating a regulatory environment that is conducive to business operations and growth.Similarly, the analysis highlights the critical role of credit availability in facilitating investment decisions.Access to financing emerges as a cornerstone for realizing new projects and expanding existing operations within the tourism sector, particularly for capital-intensive investments required in the hotel and restaurant industry.
Furthermore, the mathematical model's indication of non-linear relationships and the existence of optimal levels of regulation and credit availability offer a sophisticated understanding of the dynamics at play.It suggests that while regulatory simplification and enhanced credit access positively influence investment, there is a threshold beyond which their effectiveness may plateau or even decline.This insight is crucial for policymakers aiming to fine-tune regulatory and financial policies to maximize their impact on investment attraction.
The implications of this study extend beyond academic discourse, offering actionable recommendations for Ukrainian policymakers, financial institutions, and tourism sector stakeholders.To capitalize on the potential for growth and development within the tourism industry, Ukraine must pursue regulatory reforms that streamline business processes, enhance the transparency and predictability of regulations, and foster a supportive environment for both domestic and international investors.Additionally, financial reforms aimed at improving credit availability, through more favourable lending conditions and the introduction of specialized financial products, are essential for unlocking investment in tourism infrastructure.
This research highlights the transformative potential of targeted financial and credit regulation reforms in stimulating investment in the tourism sector.For Ukraine, the path to leveraging this potential involves a strategic blend of policy adjustments, stakeholder engagement, and continuous monitoring of the regulatory and financial landscape.By embracing these measures, Ukraine can harness the full promise of its tourism industry, driving economic growth, creating jobs, and positioning itself as a premier destination on the international tourism map.
By controlling for additional factors such as market demand, location attractiveness, business size, and years of experience, the analysis offers an understanding of the determinants of investment in Ukraine's tourism industry.These findings underscore the critical role of supportive regulatory and financial environments in fostering sectoral growth and development.Creating hypothetical regression test tables to illustrate model fit and the effectiveness of the model involves presenting statistical measures that reflect how well the model explains the variation in the dependent variable (investment levels in the tourism sector) and the significance of individual predictors (Table1).<0.0001 shows that the model is statistically significant at explaining the variance in investment levels compared to a model without predictors.Lower values of AIC and BIC indicate a better model fit, with a balance between model complexity and the goodness of fit.The given values suggest a relatively efficient model given the number of predictors.Durbin-Watson (1.98) in Table 3 Close to 2, indicate no significant autocorrelation in the residuals.Jarque-Bera Test, non-significant result suggests that the residuals of the model are normally distributed, meeting one of the key assumptions of linear regression.VIF (Variance Inflation Factor) values <5 for all predictors suggest that there is no concerning level of multicollinearity among the independent variables, meaning that they provide unique information to the model.These tables collectively demonstrate that the regression model provides a good fit to the data, with significant predictors and satisfactory diagnostic tests indicating that the model meets key assumptions.The results support the effectiveness of the model in explaining the variance in investment levels in Ukraine'.

Table 2 : Coefficients and significance
Source: Authors own calculations

Table 1 : Model fit statistics
Source: Authors own calculations

Table 3 : Diagnostics for model assumptions
Source: Authors own calculations