Innovative essence and changing functions of future non-bank credit institutions: responding to the challenges of time

Abstract

The necessity of more thorough research of the future non-bank credit institutions of Lithuania, as well as their innovative development in the functioning of the Lithuanian financial system is related primarily to the necessity of covering their specific activity, as well as the research of normative legal acts in the direction of forming effective mechanisms for ensuring dynamic development of these financial institutions, which testifies to the topicality of the problem under study. The necessity of more thorough research of the role and current state of loan and credit cooperative unions and their innovative development in the functioning of the financial system of Lithuania is connected, first of all, with the necessity of defining the specificity of their functioning, as well as the revision of existing normative legal acts towards the formation of effective mechanisms of ensuring dynamic development of these financial institutions, which testifies to the urgency of the problem under study. The aim of the study is to illuminate and develop recommendations on the innovative nature and changes in the functions of non-bank credit institutions of the future. The work uses forecasting and modeling methods, due to which there is a possibility to project potential models of future non-bank credit institutions. The analysis (as a comparative) includes classification and systematization of the main indicators of non-bank credit institutions of Lithuania with the purpose of further work on their transformation in the future. Search engines identified about 30 articles on the study of non-bank credit institutions from 2016-2022, 20 sources of information were used for the study. The results demonstrated that factoring companies and finance companies that provide different types of cash loans have a strong position in the non-banking credit services market in the current environment. By the end of 2020, the share of factoring companies reached 37.3%, the share of other types of financial companies - 18.8%. In the reporting period, pawnshops lost their leading positions in the market, while maintaining the achieved volume of activity. More active institutional development of the non-banking financial sector is largely hindered by imperfect state regulation of this element of the financial system of the country, although the change of the model of state supervision over it has already brought the first positive results. The conclusion notes that in order to attract non-banking financial institutions to financing innovation projects, it is necessary to determine the priorities and opportunities for innovation activities in the national economy. In the process of selecting innovative projects for borrowing through non-banking instruments of financial institutions, it is recommended to pay attention to their role in the further development of the national economy. It is important to assess the dynamics of business and have sufficient financial resources of the subject.