Abstract
The banking sector plays a pivotal role in any country’s economic stability and growth, and Ukraine is no exception. In recent years, the banking sector in Ukraine has faced unprecedented challenges stemming from both internal and external factors, with military risks looming large on the horizon. This paper delves into the inherent nature of the development and operation of state banks in Ukraine, focusing on their resilience and adaptability in the face of such military risks. The paper explores the unique challenges that state banks encounter during times of military risks, including increased exposure to non-performing loans (NPLs). It assesses the implications of NPLs on the financial stability of state banks and the broader banking sector, highlighting the need for effective management strategies. Special focus is directed towards the examination of banking security metrics, which experienced substantial impacts due to military disruptions in 2014 and 2022, as well as the pandemic shock of 2020. Furthermore, this study analyzes the measures taken by state banks and the Ukrainian government to mitigate the impact of military risks on the banking sector. It discusses the role of international financial institutions and regulatory bodies in supporting state banks and fostering financial stability. Additionally, the paper explores the potential for innovation and technological advancement to enhance the resilience of state banks in Ukraine. It examines how digitalization and fintech solutions can contribute to more efficient operations and risk mitigation. In conclusion, this comprehensive analysis sheds light on the inherent nature of development and operation of state banks in Ukraine in the presence of military risks. It underscores the importance of robust risk management strategies, international cooperation, and technological innovation in ensuring the continued stability and functionality of state banks in these challenging circumstances. This research not only contributes to the academic understanding of state banks in wartime but also offers practical insights for policymakers and stakeholders in the Ukrainian banking sector.
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