REALITIES AND EFFECTIVENESS OF THE UKRAINIAN BANKING SYSTEM

Abstract

The paper deals with the analysis of the banking system of Ukraine. It is shown that for Ukraine the frequency and depth of crisis phenomena in the banking sector are exacerbated by the raw material orientation of the economy, underdeveloped domestic market and the circulation of foreign currency (dollarization of the economy). It should be noted that in the pre-crisis during 2006-2007, excessive mortgage lending created a "bubble" in the real estate market, which, comparing its devastating effects, corresponded to this phenomenon in the real estate market in the United States. Although the crisis of 2008-2009 demonstrated the vulnerability of the Ukrainian banking system to numerous economic and political upheavals, no significant changes in banking supervision took place to minimize systemic risks. Restoration of the banking system of Ukraine in 2015-2016 is generally in line with post-crisis trends to streamline the banking system and increase its efficiency in the world. At the same time, the weakness of the institutional environment makes it impossible to use both administrative tools and state development banks to increase productive lending in Ukraine. On the other hand, commercial banks will use refinancing loans instead of private-sector savings to lend. In this case, the probability of the need for financial support from banks increases, which will lead to a significant increase in public debt.Moreover, a system of vector autoregression models has been developed to research the impact of crisis periods on the performance of commercial banks in Ukraine. The simulation results (mainly the analysis of impulse response functions) allow concluding that interbank lending in post-crisis conditions recovers relatively rapidly (with a lag of two years). Lending to non-financial corporations and non-residents showed a decline and recovery only within four years after the crisis. Lending to the general government sector is growing every year, but at the same time loans to other resident sectors are declining. In addition, during the year after the crisis, the volume of deposits in the banking system is demonstrating a decrease. Other variables do not show any response to the crisis.