The overall efficiency of the major banks in the global financial instability

Igor Yushko

doi:10.21511/bbs.11(4).2016.06

Abstract

The urgency of the issue is due to the change of major banks functioning conditions in accordance with permanent risks, that global financial instability bears, fiscal and monetary regulation enforcement on national financial markets and from the side of supernational institutions of global financial market regulation. The aim of the paper is the research of overall efficiency of the major banks in the global financial instability. The comparative analysis of overall and individual meanings of bank products and services (earnings) sales values, net profit, assets volume, market value of major banks in researched years gave the possibility to find the tendencies of banks development taking into account global financial instability influence and institutional and regulatory foundations of national governments implementation, Financial stability council (created in Ukraine) and Basel Committee on Banking Supervision. The conditions of major global banks functioning are changing under the influence of financial supervision and institutional and regulatory requirements enforcement to banks activity financial parameters. Other factor that provokes global banks towards activity strategy change is the growth of competition both in bank sphere and non-banking institutions in connection to possibilities provided by financial innovations. The directions of further researches lie in global banking effectiveness finding in a whole from the point of view of not separate banks, or group of banks, but global banking system, which, to our mind, has already been formed. Keywords: global financial instability, effectiveness, major banks, global banking, bank efficiency. JEL Classification: F33, Е58, G21

Highlights

In relation to global integration of financial markets and transnationalism of financial services providing the conditions of bank institutions functioning are changing
The research of overall efficiency of major banks in global financial instability assumes the tackling of issues list: to analyze the concept of global financial instability; to make theoretical analysis of scientific literature on major banks efficiency evaluation, major banks activity interaction and other sectors of economy; to make empirical testing of overall efficiency of major banks in global financial instability on the basis of key parameters analysis, which are general characteristics of major banks’ efficiency during financial instability for modern development period
Global financial instability appears as a result of great financial vulnerabilities of world economy from high sovereign risks, international currency disbalances under unbalanced demand for reserve assets, fluctuations of global liquidity, great shadow capital flow, high elasticity of assets prices, high state debt of leader countries, global capital flow asymmetry and uncertainty concerning future interest rates

Summary

Introduction

In relation to global integration of financial markets and transnationalism of financial services providing the conditions of bank institutions functioning are changing. International currency disbalances, permanent crisis of international liquidity, growth of shadow capital use, the pressure on financial markets from the side of high public debt of leading countries, the asymmetry of global capital flow, mobility of trans-border bank capital flows in sum caused global financial instability. Financial instability and permanence of crisis processes in global economic space in its turn lead to unpredictable outcomes in banking sphere. Financial instability promotes the slowdown of world economic progress in a whole, weakening of corporate returns, action change of fundamental force in outer surrounding, moderation of traditional growth factors. The other factor of demand change and demand level to banking services is the implementation of modern information and innovation technologies. The banks face acute competition from non-banking payment systems

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