Domestic Banks Research Articles

CONCENTRATION OF THE UKRAINIAN BANKING SYSTEM: PROBLEMS AND PROSPECTS

The article examines the relevance of the issue of concentration of the banking system of Ukraine and identifies the main prospects for reducing the share of the state in the banking services market. The period from 2009-2022 inclusive was chosen for analysis and evaluation, which made it possible to identify the main trends and factors that influenced the growth and decline of such concentration indices as Herfindahl–Hirschman Index and CR in terms of the following indicators: assets, corporate loans, retail deposits, authorised capital, commission income, and interest income. The obtained calculations helped to determine the level of concentration of the domestic banking system. The purpose of the article is to allocate scientific approaches and carry out practical calculations to determine the degree of concentration of the banking system and to determine the need for its deconcentration. The results of the analysis demonstrate the growing scientific interest of both domestic and foreign economic schools in the problem of concentration in the banking system. However, it is worth noting that the peak of publication activity was observed in 2018-2020, with the top three countries being the United States of America, the United Kingdom, and Malaysia. The results of the calculations showed that the number of banks in Ukraine does not have a significant impact on the level of concentration. With a fairly large number of banks in 2013, namely 180 institutions, there was a sharp increase in concentration, but a larger share of the market was controlled by private capital, but since 2017, a larger share of the banking sector has been owned by the state. The author notes that the concentration of market power by state-owned banks has led to the emergence of a monopoly, but transformational measures to reduce the concentration of the banking system should be carried out taking into account the existing financial and economic feasibility. Of course, there is a risk of ineffective management decisions by bank management, but it is the largest state-owned banks that demonstrate the sustainability and profitability of their activities.

ECONOMIC ESSENCE OF THE FINANCIAL STABILITY OF THE BANKING SYSTEM

Introduction. The article examines the essence of financial stability and stability of the banking system in order to analyze and understand them. The main approaches to interpreting the concept of “financial stability” were reviewed and systematized. Based on the analysis of the interpretation of the category “financial stability” by foreign and domestic scientists, two main approaches are distinguished. A forward approach aimed at determining financial stability and an inverse approach aimed at determining financial stability through the absence of financial instability. The author's definition of the concept of “financial stability” is proposed. The author's definition of the concept of “financial stability of the banking system” in accordance with the functions of the banking system is considered and formulated. The relationship between financial stability and financial sustainability, particularly in the context of the banking system, is considered and their analysis is carried out. The purpose of the article is to analyze the main approaches to defining the concepts of “financial stability” and “financial stability of the banking system”, as well as to establish the key approaches of scientists to their interpretation. Methods. In solving the tasks, general scientific and special cognitive methods were used. The theoretical and methodological basis of the research was the economic works of foreign and domestic researchers and specialists, who shed light on the issue of financial stability management and forecasting the functioning of banking systems. The following methods were used in the research process: theoretical generalization, the possibilities of which were used to generalize modern scientific theoretical approaches to defining the concepts of “financial stability” and “financial stability of the banking system”; system approach and comparative analysis – to identify connections between financial stability and financial sustainability; graphic method – for visual display of research results; method of generalization, which made it possible to formulate the results of the study. Results. An analysis of the definitions of the concept of “financial stability” by foreign and domestic scientists was carried out, which made it possible to distinguish two approaches to its interpretation. A definition of the concept of “financial stability” is proposed. A mutual and consistent connection between the financial stability of the banking system, economic development and state security was noted. The absence of a single, clear interpretation of the concept of “financial stability of the banking system” was established. An analysis of the relationship between financial stability and financial sustainability was carried out. An interpretation of the concept of “financial stability of the banking system” is proposed. Perspectives. Financial stability of the real sector of the economy cannot be achieved without the financial stability of the domestic banking system. Therefore, the important issue of developing a new scientific and methodological approach to assessing the financial stability of the banking system arises. Indicators of assessing the financial stability of the banking system are a promising direction for further scientific research.

НАПРАВЛЕНИЯ СОВЕРШЕНСТВОВАНИЯ ИННОВАЦИОННОГО РАЗВИТИЯ ОТЕЧЕСТВЕННОЙ ЭКОНОМИЧЕСКОЙ СИСТЕМЫ

The purpose of the article is to systematize the problems and develop recommendations for improving the innovative development of the economic system of the Russian Federation. The main objectives of the article are: clarification of the content of the concept of “innovative development of the economic system”; systematization of the problems of innovative development of the economic system of the Russian Federation; formation of recommendations for improving the innovative development of the economic system of the Russian Federation. Methodology. The methodological basis of the article is the dialectical method of studying trends and problems of innovative development and a systematic approach. In the process of writing the article, such research methods as analysis, synthesis, induction, deduction, analysis of normative legal acts and statistical information were used, correlation and regression. Results. We have systematized the main institutional, organizational, financial, analytical and methodological problems of ensuring the effectiveness of innovative development of the modern economy of the Russian Federation. Based on the functional analysis, insufficient efficiency of investments in innovations in the economy of the Russian Federation 2012-2023 was revealed. Recommendations have been developed on the formation of a comprehensive federal program to enhance the innovative development of the Russian Federation (for example, for the period up to 2030), which would include measures to tax incentives for innovatively active companies, administrative impact in terms of enhancing the involvement of domestic banks and insurance organizations in innovative processes, measures to intensify the processes of formation, development and improvement of national, regional and local innovative industrial and other industry clusters, to develop mutually beneficial international transfer of advanced technologies with friendly countries.

A Forecasting Framework for Core Domestic Banks in Malta

A Forecasting Framework for Core Domestic Banks in Malta

The banking industry is tied to IT in the age of Globalisation in India

There is a growing body of research that examines the micro and institutional implications of bank globalisation, looking at things like profitability, expenses, the net interest margin and other performance indicators. The present paper describes the link between globalisation and the banking system in association with the IT sector. Despite the fact that domestic banks are less efficient, the introduction of international banks has boosted the efficiency of the banks. On the other hand, increasing IT expertise shows that depicts the best performance in the banking system. It is further found that the impact of globalisation is preferably dependent on the institutional regime and regulatory framework of India. Private banks are performing better in comparison to public sector banks. Also, the private sector banks are much more techno-friendly than the public sector banks in India. The banking system is being centralised because of the IT sector and the increment in its efficiency has been observed.

МЕТОД ТА ЗАСІБ МОНІТОРИНГУ БЕЗПЕКИ В КОМП'ЮТЕРНІЙ МЕРЕЖІ ЗАСОБАМИ SIEM

This work focuses on researching, analyzing, and enhancing methods and tools for security monitoring in computer networks. The study develops security monitoring tools and methods based on SIEM agents, improving the data normalization process from security logs. The research explores SIEM's role in the SIEM-EDR-NDR triad perspective to accelerate responses to network security threats. The investigation is grounded in the experiences of foreign companies and domestic banking networks. The interaction of SIEM-EDR-NDR components, forming a SOC triad, is examined. SIEM is utilized for centralized data analysis, including EDR and NDR, providing a comprehensive security overview. EDR detects and responds to threats on endpoints, complemented by NDR, extending SIEM analysis. This combination ensures effective response to cyberattacks, reducing "dwell time" until detection. The formulation of tasks for EDR components in the SIEM-EDR-NDR triad is discussed. Emphasis is placed on the importance of protecting endpoints at all stages of an attack, and effective strategies, such as traffic analysis, application control, and centralized cybersecurity management, are identified. Integration of EDR with existing security tools to create a comprehensive system is highlighted. Within the SIEM context, data processing stages, from log collection and normalization to event classification and correlation, are illuminated. The role of correlation in incident formation and investigation is underscored. An enhanced normalization scheme with an expanded agent deployment and key data processing stages within the SIEM system is proposed. The work addresses the improvement of event log processing in SIEM for effective network security monitoring and timely threat mitigation. The achieved goal accelerates threat response processes through SIEM agent integration, facilitating the organization and classification of information flows for prompt threat mitigation.

PROFIT MANAGEMENT ASPECTS OF UKRAINIAN BANKS IN FINANCIAL UNCERTAINTY

In this article, we single out the main characteristics of the bank's profit and examine its constitutive elements as well as its sources of formation. It’s pointed out that profit management plays a key role if a bank is to operate successfully. We also suggest our definition of profit management in banking, its purpose, and its main objectives . The article provides a detailed analysis of the financial performance of Ukrainian banks in 2020-2022 and identifies the main factors that negatively affected the amount of profit in 2022. The main factor behind the decline in the profitability of domestic banks was a significant increase in provisions for losses incurred and expected because of the war. Despite the hardships of the war, the banking sector remains operationally efficient and continues to be profitable. The article states that under the current circumstances, it is rather difficult for banks to increase their activities, so the main factor in a bank’s profitability is cost reduction. However, the results of the analysis showed that in 2020-2022, revenues consistently exceeded expenses and during this period we noticed steady growth in bank revenues. The article analyzes the main indicators of profitability of the banking sector of Ukraine in 2020-2022. The main trends that have occurred over the past three years in the domestic financial market have both directly and indirectly affected the financial results of the Ukrainian banking system.

Utilizing event marketing techniques in banking activities

clientele. Banking marketing, with its unique attributes, stands as a distinctive domain within the broader spectrum of marketing. In an era where banks primarily offer uniform services, competition among them has intensified substantially, necessitating a shift towards maximum customer-centricity and the application of marketing concepts. This research aims to investigate the theoretical and methodological underpinnings and formulate practical recommendations for enhancing the marketing support of banks, facilitating effective functioning, and establishing a diagnostic framework for assessing the utilization of marketing tools. The core tasks include a comprehensive examination and synthesis of the theoretical foundations of event marketing as a banking marketing instrument in the context of globalization and an analysis of the marketing activities of PJSC "PrivatBank" with subsequent recommendations for refining the management of its event marketing endeavors.
 In the current landscape, banks face multifarious challenges, including the repercussions of financial crises eroding client trust. The imperative lies in resuscitating the image of Ukrainian banks and enhancing marketing strategies that encompass a significant portion of the domestic banking sector's activities. These imperatives are increasingly pertinent due to factors such as limitations on price competition, internationalization of economic processes, adoption of foreign banks' products in Ukraine, and the proliferation of information technologies, expanding the purview of banking institutions' operations. To address emerging challenges, banks intensify their marketing efforts, focusing on refining products and services, developing new products, expanding customer relationship programs, monitoring competitors' activities, and fostering a marketing culture.
 Banking marketing risks are systemic functional threats linked to a bank's positioning in the market environment, and the efficacy of banking systems' functioning hinges on the ability to proactively respond to potential threats. The collection, processing, and analysis of information regarding prior experiences in marketing support of banking activities, as well as monitoring and forecasting threats and indicators affecting banking security, fall within the methods employed to safeguard operations.
 In summary, the utilization of event marketing techniques in banking activities assumes paramount significance in contemporary times, addressing heightened competition and customer trust as pivotal concerns. This endeavor offers the opportunity to refine marketing strategies, capture customer attention, and enhance the efficiency of banking operations.

ЦИФРОВА ТРАНСФОРМАЦІЯ БАНКІВСЬКОГО БІЗНЕСУ: СЬОГОДЕННЯ ТА МАЙБУТНЄ

This article delves into the nuances of digital transformation within the realm of banking, prompted by the pervasive global digitization of economies. This phenomenon has profoundly shaped the trajectory of financial technologies, giving rise to innovative banking products. The primary objective of this study is to elucidate the essence of digital transformation and assess its efficacy in shaping the development of the banking sector.The digitization of banking involves the transformation of all associated processes and information. Consequently, the integration of digital technologies into the banking domain necessitates a comprehensive consideration of the needs of three key stakeholders: the consumer, the investor, and the bank itself. The authors conducted an analysis of the regulatory and legal landscape accompanying the digital transformation of the banking sector. The study concludes that the contemporary legal framework governing the use of digital technologies in banking is aligning with current global trends.The digital transformation of the banking industry is observed to manifest in several dimensions, encompassing remote and Internet banking, electronic payments, FinTech and innovation, blockchain and cryptocurrencies, cyber security systems, electronic identification and document circulation, as well as interoperability.The domestic banking system has exhibited noteworthy progress in digitalization in recent times. However, external factors, notably the incursion into Ukraine, have introduced certain adjustments. These include the outflow of intellectual human capital abroad, diminished financial literacy due to population migration, and the closure of bank outlets, particularly affecting territorial communities, especially rural areas, resulting in a loss of connectivity with banks.In light of these observations, it is asserted that future digital transformational endeavours in the banking sector should prioritize enhancing the financial literacy of consumers of banking services. Additionally, there is a need to fortify regulatory frameworks governing the cryptocurrency market in Ukraine and establish unified standards for the regulation and supervision of banks and FinTech companies providing digital financial services.

The Elusive Connectedness between Foreign Direct Investment, Institutional Investment, Loans and Bank Credit in India

The study tried to attempt a dynamic linkage between capital inflows and bank credit in case of India. The autoregressive distributed lag (ARDL) model was applied from 1994 Q1 to 2016 Q3. The result found that FDI, FPI and Foreign Loan affect domestic bank credit positively in the long run. Specifically, with a one per cent increase in FDI, FPI and foreign loans increased bank credit by 0.13, 0.76 and 0.22 per cent, respectively. Hence FPI had the maximum impact, followed by Foreign Loan and FDI. Furthermore, the result also revealed that raising the monetary base of the country also increases bank credit, but the exchange rate remains unaffected.

Banking control in Ukraine: problems of implementation and adaptation to international standards

The article revealed that the current national legislation of Ukraine, unfortunately, does not have a legally regulated concept of "banking control". Scientific doctrine is multifaceted and contains diametrically different interpretations. Without pretending to the completeness and redundancy of the analysis of existing views on the nature of bank control, we will formulate the author's definition of "bank control". It is established that the domestic banking legislation is based on "Basel I" with the exception of the amendment regarding the inclusion of market risks from 1996. It was noted that the experience of foreign countries indicates a change in approaches to bank control. It is no longer just a control over compliance by banks with formal indicators, it is a transition to the principles of banking control defined in the international agreements "Basel II" and "Basel III", the introduction of a risk-oriented approach, quality control at the level of the banks themselves. It was concluded that the implementation of a number of Basel II and Basel III principles in Ukraine will only strengthen the Ukrainian banking sector as a whole due to a better understanding and quantitative assessment of risks, improving the quality of corporate governance and increasing business transparency.

From Borrowing to Growth: Ghana’s Public Debt Strategy within its Financial Development Trajectory

Purpose: The study examined the implications of Ghana’s soaring public debt on its financial development, specifically its banking behaviour. Given Ghana’s alarming public debt of 78.3% of GDP by 2022 and previous periods of high public debt correlating to global economic downturns, understanding this relationship is vital for both local and international policymakers.
 Methodology: The research employs annual growth rates of various financial development indicators (e.g, Ease of Doing Business Index and Digital Transaction Index) and measures public debt using the Public Debt-to-GDP Ratio. Advanced econometric methods were used to ensure data accuracy, including cointegration, error correction models, and tests like Dickey-Fuller, Augmented Dickey-Fuller, and Sargan-Rhargava Durbin-Watson.
 Findings: The ADF test confirmed the stationarity of all study variables. Cointegration tests show a long-term equilibrium relationship among the variables. In the short run, a positive and significant relationship exists between variables such as Domestic Bank Intermediation, Financial Development, and Public Debt. Regression outcomes indicate that as Public Debt escalates, there’s an associated increase in Financial Development in Ghana.
 Implications: These findings reveal that despite the potential pitfalls of high public debt, a complex dynamic exists where increasing public debt positively correlates with financial development in Ghana’s short run. This insight can be valuable for policymakers in balancing infrastructural investments, social programs, fiscal sustainability, and financial growth, especially for developing nations facing similar debt scenarios.
 Originality: This study offers a unique, in-depth three-decade analysis (1992-2022) on the relationship between Ghana’s public debt and banking behaviour. It is an empirical precedent for other nations to understand the intricate relationships between public debt and financial growth.

Impact of Non-Performing Assets over Bootstrapped Efficiency of Banks: Analysis of Indian Domestic Banks

The present paper examines the possible impact of Non-Performing Assets (NPAs) on the efficiency estimates of banks. The bootstrapped efficiency scores of 44 domestic banks of India have been examined over a period of 12 years from 2010–11 to 2021–22. The results indicate that public-sector banks performed well in the efficiency aspect as compared to private-sector banks. The Wilcoxon signed-rank test discerned that there is a significant impact of NPAs over the efficiency estimates. The results divulge that non-consideration of NPAs leads to underestimation of the efficiency of banks. The results are expected to be fruitful for policymakers, regulators, banks, and researchers. The inference is very crucial for researchers as well as regulators while comparing the efficiency of public and private sector banks because public sector banks seriously suffer from the problem of mounting NPAs. The comparison of efficiency scores in different years unveils the strong relationship of efficiency estimates with money deposited into banks and the amount lent by banks. The outcomes of the study hold significant potential for policymakers, regulators, and banks alike, as they seek to get a comprehensive understanding of the intricate dynamics surrounding lending, deposits, and the overall efficiency of banking institutions. Further, since the impact of not including NPAs was found to be worse on managerial efficiency, the managers have to make rational use of banking inputs in order to maximise outputs. The study is likely to be a useful reference for researchers interested in researching various aspects of efficiency.

Can Repatriation Tax Holidays Teach Us Something About Monetary Policy Transmission?

AbstractI study the “bank lending channel” using the 2004 repatriation tax holiday as a natural experiment. I isolate the effect of the repatriated funds on loan supply by (i) comparing the differences in lending between multinational and domestic banks pre‐ and postrepatriation and (ii) using the change in cash holdings abroad as an instrument for the repatriated funds. My results support the existence of the “bank lending channel.” I document that each additional repatriated dollar led to an increase of $0.04 in lending, which is driven entirely by commercial and industrial loans.

Role of Domestic Banking and Financial Institutions in Project Finance: Insights from Hydropower Sector in Nepal

Hydropower is a low carbon renewable energy alternative for replacing carbon emission energy sources. In Nepal, this infrastructure sector is being developed for fulfilling the internal demand of electricity. Previous studies emphasized public-private partnership (PPP) utilizing project finance (PF) model in infrastructure sector. Recognizing the importance of domestic banking and financial institutions (BFIs) in project finance this study delves into factors significantly affecting the role of BFIs in project finance. Cross-sectional survey utilizing questionnaires was conducted among respondents representing the independent power producers (IPPs) and BFIs in Nepal. Regression analysis showed predictor variables like economic environment, guidelines of the central bank and low default rate have significant impact on project finance. issues related to adequate legal provision for non-recourse financingrole of BFIs for project finance arrangement. Credibility of hydropower project sponsors is an important determinant in financing hydropower project. The availability of comparatively more bankable projects in other investment sectors against the investible fund constraints resulted in limited complete project finance arrangement of hydropower projects. Detail investigation on guarantees to the lenders against the project loan and improvements needed in legal frameworks to accommodate the non-recourse finance and making economic and legal environment friendlier to private sector is the limitation of this study left for future researches.

The impact of size on income diversification: an empirical study on commercial banks in Vietnam

Banks are the engine of the economy. Therefore, bank performance has a direct impact on the development and security of the entire economy. The main source of income for commercial banks comes from lending and capital mobilization activity. Competition in the banking industry is increasingly fierce, not only among domestic banks but also with foreign banks. Thus, banks are trying to diversify their income sources, especially from non-interest activity. Most previous studies study the relationship between the bank's income diversification and the increase in the proportion of income from non-interest products and services. However, the relationship between income diversification and bank scale has not been studied as much. This paper examines the relationship between income diversification and commercial bank size in Vietnam. The study applies a panel data regression model with a sample of 23 commercial banks in Vietnam in the period 2012–2020, using the generalized least squares method to overcome variable variance and autocorrelation in the research model. Our results show that bank size has a positive impact on the degree of income diversification. At the same time, size has a larger impact on income diversification at large banks than small banks. Therefore, smaller banks need to concentrate on developing modern technology systems as well as improving the quality of personnel and operating experience rather than investing in new products and services. Further research may expand to include commercial banks of countries or regions in order to get a deeper look at the impact of size and some economic factors on income diversification.

Analysis of the Effect of Global Uncertainty and Financial Development on Foreign Direct Investment in Indonesia

The world is currently facing unprecedented uncertainty in social, political, and economic aspects, which continuously evolve every year owing to extraordinary events that impact countries worldwide. In contrast, The growth strategy of a country organizes must include Foreign Direct Investment (FDI), especially in Indonesia. The fluctuation in foreign investment in Indonesia indicates that foreign investors also consider growing global uncertainty alongside the development of Indonesia’s financial sector. This study examines the relationship between global uncertainty and financial development on FDI in Indonesia from 1997 to 2020 using the Autoregressive Distributed Lag (ARDL) method. The results indicate that global uncertainty significantly negatively impacts Indonesia’s FDI in the short and long terms. However, global economic policy uncertainty positively influences Indonesia’s FDI in the long term. This indicates that Indonesia has become an attractive alternative for foreign investors during global economic policy uncertainty. Regarding financial development, the amount of credit provided by the domestic banking sector to the private sector in Indonesia positively influences Indonesia’s FDI in both the short and long terms. This demonstrates that Indonesia’s financial condition and infrastructure can determine foreign investors’ decisions to invest in Indonesia.

The limits of hegemony: U.S. banks and Chilean firms in the Cold War

Governments in hegemonic states use economic sanctions to induce changes in other countries. What happens to international business networks when these sanctions are in place? We use new historical firm-level data to document the destruction of financial relations between U.S. banks and Chilean firms after socialist Salvador Allende took office in 1970. Business reports and stock prices suggest that firms were mostly unaffected by having fewer links with U.S. banks. Substitution of financial relations towards domestic banks appears to be the key mechanism explaining these findings.

Development Prospects of Modern Banking

Relevance. The philosophy of Industry 4.0 today dictates the complete transfer of many business areas to the online environment, which has been successfully demonstrated by transformational changes in such areas as trade, communications, finance, education, public service, etc. The digital model of the national economy built on this basis is constantly being transformed and requires monitoring of the processes taking place in the information environment. It can be noted that today the world economy has reached a certain point of no return in its development, from which it is no longer possible to turn production processes from a digital model back to a traditional or analog one. The purpose of the study was to assess current trends in the digitalization of the banking sector in the face of growing competition. Objectives: to assess the current state and level of development of banking in the current socio-political conditions; to systematically present the main technological solutions that are actively implemented in banking; to highlight the key advantages of banking; to outline the horizon of banking participation in the online space. Methodology. The methods of generalization, systematization, analogy, graphical and logical analysis, idea generation were used in the work. Results. Based on a systematic vision of digitalization processes in the banking sector over the past 20 years, an analysis of the level of development of the leader of the banking business Sberbank in the world ranking, a conclusion was made about the need for further investment in technology development. Conclusions. The article discusses the directions for the future development of banking in the domestic banking sector and draws conclusions about the further development of technologies in the context of the increasing activation of generation Z in the socio-economic life of society

Commercial Banking from Oil Crisis to Debt Crisis: The Case of Lloyds Bank

Abstract In January 1998, the British weekly The Economist called the British bank Lloyds a “money machine”. Such an outcome was far from inevitable for a bank that had been one of the hardest hit victims of the 1982 sovereign debt crisis, when most developing countries found themselves unable to repay debts accumulated over the course of the 1970s. Having overextended itself in the developing world, it took Lloyds more than a decade to return to profitability. This result was the consequence of a complete transformation of the bank’s business and management model. Branches and international loans were sidelined, as was the investment banking business, deciding to focus its activities on domestic banking. The article analyses the reasons behind the transformation of Lloyds Bank from a national bank to an international power in the 1970s and, therefore, the reverse process between the 1980s and 1990s following the sovereign debt crisis. Thanks to the examination of archival documents recently opened for consultation, the article sheds new light on various issues analysed from banking and business history, in particular on how risk is calculated, how innovative decisions are made in a context of crisis and on the role of managers in shaping and changing the culture of these institutions.