Formalization of factors that are affecting stability of Ukraine banking system

Abstract

Intensification of financial development during last decade causes transformation of banking sector functioning. In particular, among the most significant changes over this period should be noted the next ones: convergence of financial market segments and appearance of cross-sector financial products, an increase of prevailing of financial sector in comparison with real economy and level of their interdependent, an intensification of crisis processes in financial and especially banking sector and a significant increase of the scale of the crisis consequences etc. thus, in such vulnerable conditions it is become very urgent to identify the relevant factors that can influence on the stability of banking sector, because its maintenance seems to be one of the most important preconditions of the stability of the national economy as a whole. Purpose of the article is to analyze key performance indicators of the Ukrainian banking system, clarify its main problems, identify relevant factors of the stability of the Ukrainian banking system and the character of their influence on the dependent variable. Realization of the mentioned above tasks was ensured by regression analysis (OLS regression). Analysis of key indicators that characterize current situation in the Ukrainian banking system found out the existence of numerous endogenous and exogenous problems, which, in turn, cause worsening most of analyzed indicators during 2013-2015. Unfavorable situation in Ukrainian banking system determined the necessity of identification of relevant factors of banking system stability to avoid transmission of financial shocks. According to the results of regression analysis on the stability of banking sector positively influence such factors as increase of interest margin to gross income ratio, reserves to assets ratio, number of branches, ratio of non-performing loans to total loans. Meanwhile, negative impact on stability of banking system has an increase of liquid assets to short term liabilities ratio and cost to income ratio. Empirical results of the research found out that grate damage to the stability of banking system has some parameters of banking activity, that’s why the main purpose of the regulation by the National Bank of Ukraine should be strengthening of macroprudential supervision and intensification of adaptation of Basel II and Basel III requirements.

Trust crisis in the financial sector and macroeconomic stability: a structural equation modelling approach

“…The financial system development from the financial intermediation perspective plays a decisive role in the mobilisation and redistribution of financial resources for productive activities, thereby contributing to the growth of the country's economy. The role of systemically important banks (Buriak et al, 2015), imbalances in the financial sector (Vasilyeva et al, 2013), factors that are affecting the stability of financial system (Vasilyeva et al, 2016), determinants of alternative finance development (Bilan, Rubanov, et al, 2019) and the role financial knowledge of credit criteria on obtaining debt financing (Kljucnikov & Belas, 2016) have been studied. However, the institutional development of financial intermediation is the most closely linked to the destabilisation processes that occur in the financial sector of the economy due to the volatility of trust in it.…”

Shadow Economy and its Impact on Demand at the Investment Market of the Country

“…The formation of the country's favorable investment environment, being under the influence of external and internal factors, is considered to be the basis for investment attractiveness of any country (Cheba & Szopik-Depczyńska, 2017). One of the biggest destructive factors is the shadow economy (Al-Sadig, 200;Blajer-Gołębiewska & Kos, 2016;Bobenič Hintošová et al, 2018;Kostyuchenko et al, 2018;Leonov et al, 2014;Vasilyeva, 2013Vasilyeva, , 2016Vasilyeva, , 2018.…”

Trust cycle of the finance sector and its determinants: The case of Ukraine

“…Therefore, it is relevant to study the existing scientific developments in the field of identification of factor characteristics for the financial processes. Thus, methodologies for determining determinants in banking are covered in the works of such scientists as Vasylyeva et al (2016); Abdul Hadi et al (2018); Skvarciany et al (2018), features of processes characteristics in the insurance sphere are described in the papers: Kozmenko and Roienko (2013), Bagmet et al (2015), Bagmet (2011), and the specificity of identification in the investment field is disclosed in the works: Leonov et al (2012), .…”