Abstract
The goal of the paper is to disclose the links between the dynamics of macroeconomic indicators and the level of bank loan rates based on international and Ukrainian practice. On the basis of the previous analysis, the paper also aims to identify the key trends in the formation of loan prices in the long run and identify problematic issues related to bank loan rates. The main characteristics of bank lending rates in Ukraine are: a) their high rates; b) sharp changes in the weighted average bank loan rates from year to year; c) higher loan rates for households compared to the cost of bank loans for businesses; d) higher bank loan rates for short- and medium-term loans versus long-term ones; e) lower rates on loans in foreign currency compared to the loans in hryvnia; and f) high share of non-performing loans to households and businesses in bank portfolios. In the context of world and Ukrainian practice, the paper demonstrates the reverse effect between macroeconomic indicators such as GDP per capita, the ratio of loans to GDP, the ease of doing business index and bank loan rates. The article also demonstrates a direct relationship between the dynamics of inflation rate in the country, the dynamics of non-performing bank loans and their rates.
Highlights
The distinctive features of the modern development of Ukrainian banks are the growing volumes of the banking business, increased competition and, at the same time, increased credit risks
The main characteristics of bank lending rates in Ukraine are: a) their high rates; b) sharp changes in the weighted average bank loan rates from year to year; c) higher loan rates for households compared to the cost of bank loans for businesses; d) higher bank loan rates for short- and medium-term loans versus long-term ones; e) lower rates on loans in foreign currency compared to the loans in hryvnia; and f) high share of non-performing loans to households and businesses in bank portfolios
In the context of world and Ukrainian practice, the paper demonstrates the reverse effect between macroeconomic indicators such as GDP per capita, the ratio of loans to GDP, the ease of doing business index and bank loan rates
Summary
The distinctive features of the modern development of Ukrainian banks are the growing volumes of the banking business, increased competition and, at the same time, increased credit risks. All of that makes it difficult for banks to maintain financial stability and getting profits. Pricing of banking products is a key element in determining the desired level of bank profitability. Interest rates on bank loans are a macroeconomic indicator and characterize the cost of borrowing for the real sector of the economy. A bank can vary prices in a wide range, using prices as an important tool of attracting customers and promoting services. Pricing is one of the most important aspects of the bank’s marketing activities, as well as a control lever that allows you to generate the amount of the bank’s profit
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