THE BANKING SYSTEM OF UKRAINE IN WARTIME

Abstract

This article aims to assess changes in the banking system of Ukraine in 2022 under martial law (at the macro level) and the vulnerability of banks to financial stress (at the micro level). The proposed method uses cluster analysis of the main ratios for banking stability based on the agglomerative hierarchical clustering algorithm.The analysis of changes at the macro level under martial law shows that anti-stress measures ensured that a significant negative stress reaction was avoided. The analysis of the vulnerability of banks to financial stress shows that a significant number of banks had problems with funding and turned to the Central Bank, but by the end of the year, the funding market had stabilized. The worst situation concerned non-performing loans, but most of those are covered by reserves. Changes in legislation in Ukraine under martial law provided almost 100% coverage of household deposits in banking institutions.