Abstract
The article considers the issues on banking competition interaction, the banking system's stability and efficiency. This research aims to conduct a comprehensive assessment of the banking competition that consists of structural and non-structural methods under the institutional changes' impact. The paper presents how this influences the banking system of Ukraine through its reformation in the banking competition level and how it interacts with indicators of stability and efficiency of the banks. In this study's frame, the authors applied a developed approach to the modified model of Panzar-Rosse regarding the banking activity in Ukraine after it has been rebooted and «cleansed of». The systematization of the scientific background and approaches to assessing the level of banking competition in Ukraine noted that, generally, native authors used only one of the methods to assess the level of competition in the banking industry of Ukraine. Besides, their studies focused on the pre-crisis period, when these innovations hadn't significantly affected the banks' activity changes. The importance of solving this scientific problem is identifying problems in the banking system and taking measures to eliminate them, using the comprehensive assessment of the banking competition level, considering the explanatory indicators of the banks' stability. This issue became critical after a significant reduction in the number of banking institutions in Ukraine and the change in the institutional structure of the banking system of Ukraine under the influence of financial innovations. The study into assessing the level of competition in the banking market of Ukraine is carried out in the following logical sequence: 1) considering the studies on the given subject; 2) describing the existing methods for assessing competition in the banking industry; 3) describing the proposed modified methods of the assessing the level of banking competition; 4) providing proposals regarding the improving banking competition in Ukraine. The study's period is 2015-2019. The research object is the banking system of Ukraine. The article presents an empirical analysis of the current level of competition in the banking market of Ukraine. The findings showed that the banking sector of Ukraine is characterized by monopolistic competition, which is characterized by increasing concentration in the market of the state-owned banks. The study empirically confirms and theoretically proves that some Ukrainian banks have increased their market share due to a decrease in the number of banks in recent years due to the influence of digital transformation. The results of this study could be beneficial for the use of proposed innovative approaches to assessing the level of banking competition in Ukraine in the future, for the bank owners (including small ones), also on proposals for the perspective development of neo-banks in Ukraine, in which there is a need not only for the banking system but also for the users of banking services.
Highlights
The banking system is an integral and significant part of the country's economy
It stands to note that the banking system's level of concentration is growing rapidly in recent years
That may be a reason for the decline in the competition in the banking services market in the future or a promising vector for the development of the institutional system of the banking system of Ukraine
Summary
The banking system is an integral and significant part of the country's economy. The state of the banking system and its efficiency affect the development of the economy's real sector by providing lending by banks to the expanded reproduction, including corporate banking customers and the public, including mortgages at reasonable interest rates commissions.It is well known that microeconomics has a direct relationship between the level of competition in any market and the level of quality, efficiency, price of products and goods in this market, the integrity of competitors, and the emergence of incentives to improve their practices. The banking system is an integral and significant part of the country's economy. Healthy competition «helps make the financial sector more efficient» (OECD, 2011). Amidu and Wolfe (2013) supported the positive impact of competition on banks' stability, as «diversification within both interest and non-interest income received by banks is increasing». In the study (Bank of England, n.d.) the competition was supported because there were not enough banks before the financial crisis and some banks were «too big to be liquidated». The proper level of competition in the banking sector ensures the banking system's stability. Titko et al (2015) did not find empirical confirmation of the hypothesis of a positive competition impact in the Latvian banking sector on a level to give bank stability
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