National Bank Of Ukraine Research Articles

УПРАВЛІННЯ ВАЛЮТНИМИ РИЗИКАМИ БАНКІВСЬКИХ УСТАНОВ В СУЧАСНИХ УМОВАХ

The scientific work examines the processes of currency risk management of banking institutions in modern conditions. The article analyzes the impact of exchange rate fluctuations and the process of globalization on the financial stability and profitability of banks. It also examines the role of regulators, particularly national banks, in setting standards and requirements for currency risk management. The main purpose of the scientific article is to determine the strategies and methods that banking institutions can use to reduce currency risks and ensure financial stability in conditions of constant currency fluctuations. The study includes an analysis of innovative approaches and technologies that can help banks optimize their foreign exchange risk management. It has been proven that banks, carrying out international operations and operating in conditions of global economic instability, face significant currency risks. Scientific approaches to the definition of the term «currency risks» are highlighted. The author’s vision of the concept of «currency risk» is presented. In the scientific work, the classification of currency risk was carried out. It is noted that the main types of currency risk are direct, transactional and translational risks. The dynamics of the official exchange rate of the hryvnia in relation to foreign currencies for 2018–2023 have been analyzed. It has been proven that high levels of currency fluctuations can lead to large losses that are difficult to prevent or repay, jeopardizing the financial stability of banks and their ability to provide services to customers on stable terms. The list of systemically important banks of Ukraine is highlighted. The regulatory requirements, which are regulated by the National Bank of Ukraine and affect the activities of systemically important banks of Ukraine, have been studied. Factors that have a positive and negative influence on the process of currency risk management in banking institutions are considered. The main strategies of currency risk management in banking institutions are defined and characterized.

Current labor market development trends in the context of the economic security of the state

In modern economic conditions, issues related to the changes that have taken place in the labor market in the context of the economic security of the state are becoming important. Ensuring a sufficient level of economic security of the state directly depends on the state of the labor market, structural changes and trends in its functioning, and the level of flexibility and adaptability to new socio-political conditions. The article aims to study modern trends in the development of the labor market in the context of the state's economic security. The authors analyzed the approaches to defining the essence of the «labor market» concept, which made it possible to systematize this category's scientific and methodological approaches. The article examines issues that highlight the situation in the Ukrainian labor market during the transformation of socio-economic processes and analyzes the impact of changes in the trends of the key parameters of the functioning of the labor market on the state's economic security. The analysis was carried out based on data from the State Statistics Service of Ukraine, the Ministry of Economy of Ukraine, and the National Bank of Ukraine, which made it possible to determine the main trends in the development of the labor market, identify challenges that affect the formation of the labor potential of the economy, establish indicators of the level of economic security of the country and its components, which take into account indicators of the state and efficiency of the labor market. The authors characterized the labor market in martial law conditions in Ukraine, which made it possible to outline the main consequences and peculiarities of its functioning. The labor market should play a special role in ensuring the country's economic security during wartime. The article substantiates the need to implement measures in the labor market field. In particular, it is necessary to pay attention to the issues of successfully overcoming destructive processes in the demographic development of the population, increasing the level and quality of employment of the population, which will contribute to the improvement of economic, social, and labor relations in the country, and in the perspective of the formation of the effective and sufficient labor potential aimed at restoring the economy, the social infrastructure of the country and maintaining a high level of economic security of the state.

Аналіз підходів до оцінки стійкості банківської системи України

Ensuring the sustainability of the banking system is one of the key tasks of economic policy of countries, regardless of their level of economic development. The purpose of the article is to define and analyze existing approaches to assessing the financial sustainability of the banking system of Ukraine. When considering the essence of the terms «stability» and «sustainability», it is determined that they are closely related, but have certain nuances that need to be taken into account in the context of the financial condition of the banking system. The scientific literature uses different terms to describe the state of the system, its structure and processes, which differ from the approach to defining these terms in the context of the financial sector. A study of the factors affecting the financial sustainability of the banking system has shown that they can be divided into the external and internal factors. The external factors include economic, legal, political, competitive trends, technology, and automation. The internal factors include economic, organizational and technological aspects, as well as the quality of management. It is noted that various factors are interrelated and have a multidirectional impact on the indicators of financial sustainability of the banking system. It is defined that currently there are many methods for assessing the banking system and individual banks, which differ in various parameters and indicators. The author identifies several main approaches to assessing the sustainability of banking systems in the world countries, including stress testing of the banking sector, analysis of indicators of financial sustainability of banks, assessment of the system of regulation and supervision, assessment of the level of financial stability of banks, and risks. These approaches can be used to analyze and monitor the financial sustainability of the banking system both separately and in complex combination. There are also various complex indicators and indices, such as the Financial Condition Index (FCI) and the Financial Stress Index (FSI), which are used to reflect the financial stability of countries of the world. The Financial Stress Index (FSI), developed by the National Bank of Ukraine in 2017, which consists of four sub-indices and sets the weight of each sub-index according to the volume of each market, is also examined. The author proposes general directions for improving the financial stability of the Ukrainian banking system in terms of wartime, including strengthening regulatory policy, improving financial literacy of citizens, and developing digital payment infrastructure. The carried out study contributes to the understanding of the factors that affect the financial sustainability of the banking system of Ukraine and should be taken into account when developing strategies to ensure such stability in the future.

ТЕНДЕНЦІЇ РОЗВИТКУ БАНКІВСЬКОЇ СИСТЕМИ УКРАЇНИ У 2023 РОЦІ

In 2023, Ukraine continues the war with the aggressor that began in February 2022. In this context, it is important to understand the state of the banking system as one of the main guarantees of the country's financial stability during the war and to identify trends in its further development. In order to identify the main trends that are inherent in the further development of the banking system in these conditions, it is necessary to analyze its current state. To do this, it is quite effective to study current statistical data (analysis of the dynamics of changes in key indicators, identification of the causes of their fluctuations, etc.), which highlight the activities of domestic banks in its various aspects and affect the overall level of development of the banking system. Thus, today it is appropriate and expedient to analyze the current state of the banking system of Ukraine, its peculiarities of functioning in the conditions of the war waged in the country. Thus, the relevance of the study is beyond doubt, and the topic is extremely important today. The purpose of the study is to analyze the state of performance indicators of the banking system of Ukraine by groups of banks for 9 months of 2023 and to identify trends in its further development. To achieve this goal, the author studied the existing structure of the banking system of Ukraine for 9 months of 2023 and analyzed its state for the same period. The research was based on the use of various general and specific scientific methods, namely: analysis, synthesis, induction, deduction, abstraction, generalization, economic, mathematical and statistical methods, etc. The key financial indicators of the modern domestic banking system are analyzed. It is established that since 2017, the National Bank of Ukraine has been using the following groups to analyze the activities of the banking system of Ukraine: banks with a state share, banks of foreign banking groups, and banks with private capital. The study found that the banking system is generally profitable, with its performance indicators most influenced by the performance of two groups of banks: state-owned banks and banks of foreign banking groups. The analysis also shows a positive trend towards an increase in the level of solvency of the banking system in the face of the aggressor. The author concludes that the NBU's policy is balanced and that the management of banking institutions is effective in the context of war.

МЕТОДИКА СКЛАДАННЯ ЗВІТУ ПРО УПРАВЛІННЯ: ЗАКОНОДАВЧІ РЕАЛІЇ ТА ПЕРСПЕКТИВИ УПРОВАДЖЕННЯ

The legal grounds for submitting a management report appeared in the autumn 2017 when amendments to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” No. 996 dd. 16th of July, 1999 were adopted. The definition of the management report also appeared there. The drawing up and submitting procedures for management reports for all business entities were developed by the Ministry of Finance of Ukraine, while those for banking institutions were developed by the National Bank of Ukraine. The management report is also referred to in the Financial Statements Submitting Procedure (Resolution of the Cabinet of Ministers of Ukraine dated 28th of February 28 2000 No. 419), however, according to this regulation, the Management Report is not part of the financial statements, which is stated explicitly in the text of par. 2 of Procedure No. 419. It is only submitted “together with the annual financial statements.” In case of the consolidated reporting, a consolidated management report is to be submitted. European accounting and financial reporting standards imply that financial reporting cannot provide all the necessary information to interested users about the company’s activities. Therefore, the purpose of the management report is to fill this gap and provide information about the performance that cannot be obtained from financial statements and notes thereto. This can be financial information – analysis of company indicators and existing risks, achievement of key financial performance indicators, forecast of financial indicators; and non-financial information – creation of a new product, expansion of sales markets, community and environmental activity, protection of human rights, research and development, achievement of key non-financial performance indicators, description of the company's development prospects, etc. Therefore, the appearance in the legal space of the concept of the Management Report in the domestic reporting practice is not a whim of the national legislative and regulatory bodies, it is most likely a consequence of the adaptation of the domestic laws to the European regulations. It is supposed that the management report cannot be considered purely an “accounting report”, because other company employees and even external consultants can and should be involved in preparation of the management report. Today, the form, structure, methods of submitting information, detailed content and scope of the management report are not regulated by any governmental authorities, so compiling of a management report can be considered quite “creative”. According to the authors, it should be regarded more as a reputation business card of the company, rather than an official report. The authors have performed a critical review, analysis and systematization of the legislative basis for the implementation of the management report; the results of the search for unified informational and methodological approaches for implementation of the legislative basis in the accounting and analysis regarding the preparation of the company's reporting, in particular, nonfinancial reporting, are presented.

CBDC-A New Tool in 'Financial Inclusion' Tool Kit

The Central Bank Digital Currencies (CBDC), if appropriately designed, can help to improve the Financial Inclusion in the Country.The Effective implementation needs a balanced, risk-based approach and the support to the complementary policies. The Central Banks in the World are actively considering, how the Retail Central Bank Digital Currencies (CBDCs) may fit with the Policy Goals around Total Financial Inclusion in the Country. They are:~ Central Bank of The Bahamas.~ Bank of Canada.~ Peoples Bank of China.~ Eastern Caribbean Central Bank.~ Bank of Ghana.~ Central Bank of Malaysia.~ Bangko Sentral ng Pilipinas.~ National Bank of Ukraine and~ Central Bank of Uruguay.While a Central Bank Digital Currency, like other forms of the Money, has different functions (e.g., Means of Payment, Store of Value, Unit of Account, Settlement Assets), its link to Financial Inclusion in the Country in context of its payment properties.Abbreviations: CBDC= Central Bank Digital Currency.e-KYC= Electronic Know Your Customer.EMDEs=Emerging Markets and Developing Economies.AEs=Advanced Economies.PSPs=Payment Service Providers.ACHs=Automated Clearing Houses.

Factoring in Ukraine: Current Problems and New Stage of Development

Ukraine's movement towards the European community, driven by the granting to Ukraine a candidate status for EU membership, among others, sets the task of stabilizing and improving the economic situation in the country, including further development of market relations. This, in its turn, requires a significant speeding of commodity-monetary relations and requires better management of financial resources in the process of fulfillment by subjects their contractual obligations. In such circumstances, factoring as a way to change the creditor in a monetary obligation is of great importance. Factoring represents an effective financial and legal mechanism that provides its users with the significant advantages related to the management of receivables, raising capital by enterprises for the development and operation of their business in the long-term perspective. This article is devoted to the analysis of legal regulation of factoring in Ukraine, problems of harmonisation of legal regulation of factoring with international and foreign experience, legal positions of courts on the legal nature of factoring in Ukraine. The authors point out that currently there exists an issue of insufficient regulation of factoring in Ukraine, unequal approach to the regulation of factoring for banking and non-banking financial institutions (factoring companies). It is also noted that Ukrainian legislation does not contain definition of term "factoring" as a type of activity. Instead, in the literature and in practice, the term "factoring" is defined through a factoring agreement under the Civil Code of Ukraine. According to the definition and features of a factoring agreement, the main feature of factoring is "assignment of the right of monetary claim", which in practice often leads to the identification with assignment (cession). Taking into account mentioned problems, the article analyses the trends in the development and reform of factoring in Ukraine in the near future. In particular, the authors analyse the Concept of Reforming Factoring Regulation in Ukraine, which was presented by the National Bank of Ukraine (the Regulator for the Factoring Market), as well as the main approaches to the development of legislation. The main conclusion emphasises that the concept of factoring should be brought in line with international law, and factoring as a type of activity needs to be reformed as soon as possible. The best way to reform factoring legislation would be to adopt a separate law that would comprehensively regulate all aspects of factoring.

АНАЛІТИЧНИЙ ОГЛЯД СУЧАСНОГО СТАНУ СТРАХОВОГО РИНКУ УКРАЇНИ

The article is devoted to an analytical review of the current state of the insurance market of Ukraine. An effectively functioning insurance market is an integral part of the country's market economy. In times of wide range of risks as well as uncertainty, insurance companies must provide proven insurance protection to legal entities and individuals to facilitate their efficient functioning and ensure their confidence in the future. The stability and reliability of insurance companies is a very important prerequisite for their survival and a guarantee that their missions and strategic goals will be successfully implemented The article reviews the results of the activities of the main companies in the insurance market of Ukraine. It was established that as of June 30, 2022, the total amount of insurers' assets compared to the beginning of the year (before the military aggression) almost did not change (+2.2%) and amounted to UAH 65.7 billion. At the same time, during the specified period, the number of insurers decreased - from 155 (January 1, 2022) to 142 (July 1, 2022). In general, the composition of market participants working in the life insurance segment in Ukraine has not changed. In recent months, the insurance market has demonstrated a recovery in activity indicators compared to the first shock month of the war, operational and management processes are gradually being adjusted, and the decline in indicators is reducing. On average, the volume of the non-life insurance market decreased by 25% compared to 40-50% in the first months of the military aggression, while the decline in the volume of insurance payments remains commensurate (-26%). It was concluded that in order to maintain the positive trends that have formed in the market, the National Bank of Ukraine will monitor the insurers' compliance with the requirements for proper and timely disclosure of information about their financial status, mandatory financial standards, as well as the insurers' proper fulfillment of their obligations under concluded contracts insurance.

ОРГАНІЗАЦІЯ І РЕГУЛЮВАННЯ ДІЯЛЬНОСТІ СИСТЕМНО ВАЖЛИВИХ БАНКІВ В УМОВАХ ВОЄННОГО СТАНУ

The article provides a definition of a systemically important bank, shows that their diagnosis by the NBU is carried out in two stages, in the first stage they are divided into three categories depending on the value of the bank's systemic importance indicator, measured in basis points. The list of system banks includes both state and private banks. The definition of martial law and its influence on the content of the regulatory and supervisory functions of the NBU was defined, in particular in terms of strategic areas of activity of public sector banks and post-war economic recovery; termination of activity and withdrawal from the market of banks under the control of the aggressor state. The changes to the legislation, which relate to the improvement of the procedure for withdrawing system banks from the market under martial law, are summarized. All losses and damages that may arise in this case, in accordance with the norms of international law, must be compensated by the state that carries out armed aggression against our country. It is shown that during the period of martial law, systemic state banks function on the basis of the main areas of activity approved by joint decisions of the Cabinet of Ministers of Ukraine and the National Bank of Ukraine. Their financial condition is positively affected by customer trust, service of government programs, negatively by significant losses from investing in government securities due to a sharp decrease in their investment attractiveness. To correct the situation for the better, state banks are recommended to set limit values of appetite for the risk of investments in them based on optimizing the ratio between the costs of forming reserves for possible losses and interest income from investment objects. A set of measures has been developed to strengthen the resource base of banking institutions under martial law: temporarily cancel the tax on depositors' interest income due to its low budget capacity; use the transformation of currency deposits into hryvnias with a premium; expand deposit guarantee schemes for current and term accounts of small and medium-sized businesses in the absence of signs of a person affiliated with the bank; to use the mechanisms of financial restructuring of the debtor, etc. provided for by the law.

ФІНАНСОВІ ІНДИКАТОРИ В СИСТЕМІ МОНІТОРИНГУ ЕКОНОМІЧНОЇ БЕЗПЕКИ КРАЇН

The article is devoted to the systematization of financial indicators for assessing the level of countries economic security and defining the role and importance of indicators in the system of economic security monitoring. It is determined that the indicator approach is the most common in terms of assessing and monitoring the level of financial security and allows for effective management of financial risks. In this case, indicators act as measures of the degree of stability, reliability and efficiency of the country's economic system. The authors prove that indicators form the methodological basis for monitoring the level and status of economic and financial security. The indicators are classified according to security subsystems and take into account the peculiarities of their formation. The authors analyze the approaches to systematization of financial indicators used in Ukrainian practice, in particular, within the framework of the official methodology for assessing the level of Ukraine’s economic security, as well as within the methodology for assessing the level of financial stability and sustainability used by the National Bank of Ukraine. Among the approaches developed and implemented at the international level, the author examines the IMF Financial Sustainability Indicators System, the IMF and World Bank Debt Sustainability Framework, The World Bank Global Findex Database, and The system of Financial Indicators for Socioeconomic Development of The World Bank (Open Data). Keywords: financial indicator, economic security, financial security, security monitoring, resilience.

СИСТЕМА ОЦІНКИ РИЗИКУ ДІЯЛЬНОСТІ СТРАХОВОГО БРОКЕРА

The article reviews the risk assessment system of insurance broker activity in Ukraine, compares the current norms of risk assessment of insurance broker activity, namely the Regulations "On the approval of Methodological recommendations on the organization of corporate governance in financial service providers and non-bank financial groups" and "On the approval of the Regulations on the organization risk management systems in financial service providers and non-banking financial groups" with prospective changes to this process promoted by the regulator, the National Bank of Ukraine, taking into account the strategic goals of the development of the financial sector of Ukraine. It is noted that any participant in the market of non-banking financial services faces problems of resource fulfillment of essential requirements regarding risk management criteria. Moreover, the significant expansion of the quantitative and qualitative indicators of the risk assessment of the insurance broker itself emphasizes the need to narrow the calculations, taking into account the scale of activity of a participant in the market of non-banking financial services. It is proposed to optimize the determined overload of indicator calculations and reporting on risk management of the insurance broker by applying the expert method. In order to optimize the risk assessment of the insurance broker's activity, it is proposed to change the significance of each component of the process. Thus, when assessing the risk of an insurance broker's activity, preference is given to mandatory regulations – 40% of the total risk factor, 30% to activity indicators, and the weight of risk management and corporate governance was 20% and 10%, respectively. The recommended weighting coefficients were determined by conducting an expert evaluation of the opinion of 24 insurance market specialists, who identified the priority component of the risk assessment as meeting the standards of capital adequacy, liquidity and solvency. On the other hand, corporate governance and internal audit, which the regulator pays attention to, for an insurance broker corresponds to a less significant 20% of the total volume of risk assessment indicators of its activity.

ІНСТИТУЦІЙНЕ ЗАБЕЗПЕЧЕННЯ ІННОВАЦІЙНОГО РОЗВИТКУ КРЕДИТНОГО РИНКУ

Institutional support for innovative development of the credit market is an important object of research, within the framework of which the search for effective methods, means and tools is carried out to improve the efficiency of its functioning. Analyzing the activities of the credit market, it can be noted that low efficiency of its work is largely determined by the imperfection of institutional support for the process of introducing innovative credit services.The purpose of the article is to study institutional support for innovative development of the credit market and determine their influence on the credit market development in Ukraine, which is necessary for understanding the interaction of credit market institutions, identifying factors that pro-mote or inhibit innovation and developing a strategy for creating a favorable innovation environment.Within the article, subjects of institutional support for innovative development of the credit market are studied. Considerable attention is paid to participants in the credit market in the field of innovative development, as well as to the regulatory legal acts that guide institutions in their methods of influence and regulation in the credit market, and functions of institutions are defined. Government institutions (the Na-tional Bank of Ukraine, Verkhovna Rada of Ukraine, Ministry of Finance of Ukraine, Ministry of Economy of Ukraine, National Securities and Stock Market Commission, Individual Deposit Guarantee Fund, Anti-monopoly Committee of Ukraine) were selected as subjects of institutional support for innovative develop-ment of the credit market. state institutions providing support for innovative activities (State Innovative Financial and Credit Institution), credit infrastructure institutions (banking and non-banking institutions, credit history bureaus, collection companies, rating agencies, credit brokers), fintech companies, educa-tional institutions (universities, scientific centers), innovative institutions (laboratories, technology parks, industrial parks, business incubators, technological hubs).The study of the influence of the above-mentioned subjects of institutional support for innovative development has become an important tool for understanding the interaction between government regulators of the credit market, credit institutions, educational institutions, innovative institutions, and fintech companies

УПРАВЛІННЯ ОПЕРАЦІЙНИМИ РИЗИКАМИ В ПЛАТІЖНИХ СИСТЕМАХ

The article examines the peculiarities and forms of manifestation of operational risks in payment systems in the conditions of increased digitalization of the payment services market. Based on the analysis of the recommendations of international financial organizations and the National Bank of Ukraine, a classification of operational risks inherent in the activity of payment systems was carried out, and four types of them were distinguished: information risk, risk of errors in management processes, cyber risk and risk of user errors. The main sources of operational risks are identified and it is proven that the vast majority of them are related to the use of new information technologies and the strengthening of cyber threats in the market of payment services. The analysis of operational risk management practices in payment systems allows to conclude that they are heterogeneous and depend on factors that expose payment organizations and payment systems to risks. The characteristics of the forms of manifestation of certain types of operational risks in payment systems are given. The main results of the potential impact of operational risks on the activity of payment systems are characterized, and a method of calculating the indicator of inherent risk is proposed, which characterizes the level of its priority for the payment organization. It is determined that the main goal of operational risk management in payment systems is to maintain the operational stability of the payment organization and ensure the continuity of the payment system. The structure and main components of the operational risk management system are characterized. A functioning scheme of the operational risk management mechanism in the payment system has been developed, the use of which makes it possible to increase the efficiency of their management. A system of key indicators characterizing the limits of changes in the level of operational risk is proposed and can be used for the purpose of early detection and assessment of the potential impact of individual risk factors. The main sources of coverage of damages and losses arising as a result of implementation of operational risk events in the payment system are determined. The main sources of occurrence and features of the influence on the activity of payment systems of cyber threats are characterized. A system of measures to increase the efficiency of operational risk management based on the improvement of the technical-technological and organizational-management characteristics of the functioning of payment systems is proposed.

Особливості розвитку ринку банківських послуг України: ефект розміру банку та закон Гібрата

Quantitative description of the development of the banking services market is important for making optimal decisions in the regulation of the banking sector. The importance of the question lies in the fact that such a description makes it possible to take into account the transformation of banks, sources of risks, to identify the main trends or regularities in the process of evolution. The aim of this article is to test Gibrat's law as a hypothesis for the development of the banking services market of Ukraine, by an empirical experiment where all existing banks are tracked over time on an annual basis and the distribution of banks by the size of assets or income is constructed annually. The work assumes the possibility of establishing a statistical size (assets or income) distribution of banks with certain average values and variances according to the lognormal distribution of banks. The research methodology is based on statistical analysis and verification of the correspondence of the empirical size distribution of banks to the logarithmically normal one provided by Gibrat's law. The study period covers the banking sector from 2014 to 2023 and includes all operating banks. The information base for the analysis was the annual official reporting data (report on the financial state) of banks, published by the National Bank of Ukraine and on the banks' official websites. The data set defines the assets and income of all banks and each bank separately, annually. It has been proven that Gibrat's law is not fulfilled for banks of Ukraine, the size distributions do not obey the Gaussian distribution law. The rate of growth of banks is not random (as it is assumed by Gibrat's hypothesis). The trend of gradual approximation of income distributions to the lognormal type and the potential possibility of implementation of Gibrat's law for the period of 2022–2023 has been revealed.

ЗМІСТ ФІНАНСОВОЇ ІНКЛЮЗИВНОСТІ ЯК ІНДИКАТОРА ДОСТУПНОСТІ ФІНАНСОВИХ ПОСЛУГ

The article analyzes the reform of the financial sector of the economy. Available services for the population have been studied. It has been determined that many unbanked customers typically have some form of identification that is typically missing from the documentation and credit records required by financial service providers to assess creditworthiness and carrying out due diligence of consumers. Aspects of the formation of sustainability of financial inclusion are determined. The analyzed level of financial inclusion is determined on the basis of the conducted questionnaire, which contains eighteen questions and the obtained results are combined into two groups. It has been studied that financial inclusion is one of the identified directions, the basis of which is an increase in the level of accessibility in the use of all financial services and the growth of financial literacy and awareness of the country's population. Financial inclusion, as one of the strategic directions of the sustainable development of the economic growth of Ukraine, is to ensure macro- financial stability, increase the reliability and technology of the financial system, achieve European standards in the financial market, increase trust in the financial market, implement the Association Agreement between Ukraine and the EU and other international contracts of Ukraine. The components of financial inclusion are indicated. It was found that Ukraine has a low level of use of financial services. It was studied how the financial literacy of the population increases with the help of financial inclusion. The article researched the institutional aspects of financial inclusion and its elements, which should be developed in the conditions of digitalization of economic relations. Namely, ensuring digital financial inclusion and introducing responsible digital financial practices; promoting the development of digital financial services. The need to implement strategic development of financial inclusion by the National Bank of Ukraine is substantiated. It is highlighted that the strategy for the development of financial inclusion in Ukraine should be based on the quality of financial services for the population that has access to them, and create new ways of distributing at least basic services, and itself for the population that does not have access to them.

РОЗВИТОК БАНКІВСЬКОГО СЕКТОРУ ЯК КЛЮЧОВОЇ ЛАНКИ ФІНАНСОВОЇ СИСТЕМИ В УМОВАХ ВОЄННОГО СТАНУ

The article is devoted to the study of performance indicators of Ukrainian banking institutions under martial law. The banking sector is a key link that ensures the development of the financial system. Therefore, it is important to summarise the current trends in the functioning of the banking system during martial law. The banking industry has faced many challenges, but is still functioning thanks to prompt decisions taken by the National Bank of Ukraine and the authorities. The article examines the new rules and legislative changes to the activities of banks adopted by the NBU after the introduction of martial law. In particular, the discount rate was increased (up to 25%) as one of the most important monetary instruments used by the NBU in implementing its monetary policy. The dynamics of changes in Ukrainian banking institutions is presented. The article monitors lending by domestic banks to other economic entities and the volume of additional resources attracted by banking institutions of Ukraine. It is concluded that despite active military operations and an unstable macroeconomic situation, lending to business entities tends to grow, but there is a slight slowdown in lending to households. Deposits from both households and the corporate sector are also growing. This demonstrates the confidence of businesses and households in the banking system, despite the difficult economic situation in Ukraine. The article identifies a problem in the active operations of domestic banks, in terms of the share of non-performing loans, with a deterioration in the value of this indicator. The author analyses the volumes of income and expenses, which tend to grow. During the war, the profit of Ukrainian banks decreased by 3 times compared to the previous year. The indicators of profitability on assets (ROA) and capital (ROE) of Ukrainian banks were studied. Currently, there is a decrease in their value, which is not positive. The reason for the decline in bank profitability was the increase in provisioning due to the incurred and expected losses as a result of the war. Further prospects for the development of the domestic banking sector in the context of war are outlined.

КРЕДИТНИЙ РИЗИК У СУЧАСНИХ УМОВАХ

The article carried out scientific research and investigated the problem of the correct interpretation of the concept of "credit risk". The norms of the current legislation of Ukraine regarding the definition of the concept of "credit risk (CR)", which is regulated as the amount of expected losses or damages (EL) for an asset as a result of the debtor’s (counterparty’s) default, have been analyzed. The concepts of "default" and "credit loss" are considered, the National Bank of Ukraine’s assessment of the credit portfolio due to the war is disclosed, the losses of which are estimated at the level of 30%, which poses a great threat to the banking sector. Changes to a number of regulatory documents regarding prudential credit risk assessment approaches have been analyzed: banks’ opportunities to apply simplified credit risk assessment procedures have been expanded; established temporary features of credit risk assessment to support banks in providing flexible conditions, socalled credit holidays, to borrowers in a period of uncertainty; an amendment was made to the Instruction on the Procedure for Regulating the Activities of Banks in Ukraine, which reduced the risk weight (RWA) from 150% to 100% for consumer unsecured loans. The restrictions on foreign currency exchange operations related to non-resident banks on the so-called "stop" conditions for the first group of the Foreign Currency Classifier to support the liquidity of banks have been substantiated. Innovations of the International Financial Reporting Standard IFRS (IFRS) were studied, which in the legal and economic context of the essence of credit risks provides for the concept of expected credit losses (which will always be greater than zero), which should reflect probable losses due to the ownership of financial assets. The means of reducing credit risks were analyzed, in particular, diversification: geographical and portfolio. Considering the specifics of credit risks, the specifics of credit transactions are substantiated. The criteria for assessing credit risks based on qualitative and quantitative analysis are revealed. It was concluded that the actual assessment of credit risks in financial terms is under the influence of credit risk on the financial results of business entities and banking institutions and the specifics of credit operations.

BANKING SYSTEM OF UKRAINE: CURRENT CHALLENGES AND DEVELOPMENT TRENDS

Introduction. The domestic economy has been operating under conditions of military terror for more than a month, and the stability and predictability of the functioning of the national banking system are of great importance here. Work in the conditions of martial law became to some extent a stress test for Ukrainian banks. In today's conditions, an effective process of verifying the reliability of banks is of critical importance for the financial stability of both business and the population. Methods. The theoretical and methodological basis of the research is the fundamental provisions of general economic theories, general theories of development. In order to achieve the set goal, the methods of analysis, synthesis and generalization are applied in the article, in particular to determine the directions of development of the banking system. A systematic method was used to substantiate the proposals regarding the prospects for the development of banks in the conditions of military aggression. Series of dynamics, average values, comparison, graphic methods are used in the evaluation of the dynamics of loans; estimates of the amount of loans, rates of increase in the assets of the banking system and the authorized capital of banks. The results. The peculiarities of the development of the banking system of Ukraine at the current stage are considered. The impact of the military-political crisis on the work of the banking sector of the economy is determined. The rates and reasons for growth in the volume of assets of the banking system of Ukraine were assessed. The specific weight of banking assets in the country's GDP over the past five years has been analyzed. The causes and extent of the decrease in the authorized capital of banks have been studied. It has been proven that lending is the area of banking business that suffered the most from military aggression. The development trends of the Ukrainian banking system in the conditions of the military-political crisis are determined. The complex of anti-crisis measures applied by bank management was evaluated. A retrospective assessment of subjective and objective factors influencing the functioning of the banking system was carried out and the prospects for its development were outlined. Discussion. The obtained results of the research can be used for further scientific developments regarding the restoration of the banking system of Ukraine in the conditions of military aggression with the help of state support of credit programs for enterprises in important spheres of the national economy. Keywords: banking, management, commercial bank, the National Bank of Ukraine, financial crisis, regulatory capital, the banking sector.

ТРАНСФОРМАЦІЯ ФІНАНСОВОГО УПРАВЛІННЯ В БАНКІВСЬКОМУ СЕКТОРІ УКРАЇНИ ПІД ЧАС ВІЙНИ

Introduction. None of the spheres of social life, including the economic, can take place according to established approaches and mechanisms. Banking is no exception, first of all, the development of the banking sector, in which ambitious goals that lead to the acceleration of its transformation processes are always prominent. A key issue in the functioning of the banking sector at any stage of its development is ensuring financial stability in the short term and financial stability in the long term. This issue became even more relevant during the COVID-19 pandemic, and gained importance with the full-scale invasion of the aggressor country on the territory of Ukraine. The purpose of the article is to define the features of effective financial management, and substantiate the main parameters of the banking institutions business processes organization in the conditions of military aggression Results. The article formulates the main goal and principles of effective financial management in banking sector, namely: transparency, variability, reflexivity, informativeness, hierarchy, adaptability and corporateness. It has been proven that integration and process approaches to management are used in banking to ensure its effective functioning,. The effectiveness of financial management in the banking sector of Ukraine during 2021-2022 was studied through the analysis and assessment of the changes dynamics in banks' financial results, the amount of deductions to reserves for the depreciation of bank assets, the amount of non-performing loans, and the capital standards of banks. The key decisions of effective financial management by the National Bank of Ukraine after the full-scale invasion of the Russian Federation are diagnosed. Conclusions. The main parameters for organizing the business processes of the vast majority of banking institutions for effective bank-client communication are proposed, in particular, the organization of remote access, ensuring a smooth process of customer service, work on minimizing losses, reassessing the state of the loan portfolio and finding out its level of deterioration, duplication of personnel functions and others. It has been proven that in modern conditions effective financial management in banking is transformed in view of modern challenges and should be situational, fast and economically justified.

State Regulation in the Sphere of Virtual Assets Turnover in Ukraine

Problem settings. The article examines the legal provisions for determining the measures of state regulation of the activities of virtual assets market participants which the Ukrainian legislator decided to apply in the sphere of circulation of such assets in Ukraine. The article analyzes the provisions of the Law of Ukraine No. 2074-IX “On Virtual Assets” dated February 17, 2022, which defines the State regulation of the virtual assets market as the implementation by the State, represented by the National Securities and Stock Market Commission and the National Bank of Ukraine, of comprehensive measures to streamline, control and supervise the virtual assets market, regulate the rules of operation of service providers related to the circulation of virtual assets, as well as measures to prevent and counteract abuses and violations in the virtual assets market. The study of legal regulation problems in the field of virtual assets was carried out such scientists as: S. Honcharenko [1, p. 152-157], A. Ovcharenko [2, p. 200-202], N. Arkhireyska, O. Kuchkova [3], V. Korneev [4, p. 40-46], O. Lyzunova [5, p. 196-199], O. Kud, M. Kucheryavenko, E. Smуchok [6, p. 33], V. Ryadinska [7, p. 152-157], A. Protsenko [8, p. 130-134], V. Polatai [9, p. 155-162] and others. The target of the research is to analyze the norms of Law No. 2074-IX to determine measures of state regulation of the activities of participants in the virtual assets market, which the Ukrainian legislator decided to apply in the sphere of circulation of such assets. Article’s main body. It is stated that the legislator has classified service providers related to the circulation of virtual assets and users of such services as participants of the virtual assets market. Services related to the circulation of virtual assets include services for the storage or administration of virtual assets or virtual asset keys, services for the exchange of virtual assets, services for the transfer of virtual assets, intermediary services related to virtual assets. The author emphasizes that the activities of service providers related to the circulation of virtual assets are allowed only subject to obtaining a permit for the provision of services related to the circulation of virtual assets of the relevant type. In addition, the amount of the fee for issuing a permit for the provision of services related to the circulation of virtual assets for residents and non-residents of Ukraine is fixed and it is noted that the issuance of such a permit is carried out in accordance with the procedure established by the National Securities and Stock Market Commission. At the same time, it is not clear what exactly the legislator meant by “permission”. Conclusions and prospects for the development. Taking into account that for such a permit providers of services related to the circulation of virtual assets will have to pay a certain amount of money, the author assumes that it will be a “state permit for the right to provide services related to the circulation of virtual assets” and in order to obtain it, service providers will have to meet certain conditions established by the relevant state body. This shows that the Ukrainian legislator introduces licensing of service providers related to the circulation of virtual assets, although for some reason does not use the term “licensing”. This fact is also confirmed by the requirements established by this Law for persons who plan to carry out activities for the supply of such services, which are essentially “licensing conditions”. The requirements for the procedure of obtaining a “permit” are similar to the requirements for the procedure of obtaining licenses enshrined in the Law of Ukraine No. 222-III “On Licensing of Economic Activities” dated March 2, 2015. It is summarized that the Ukrainian legislator in the formation of measures of state regulation of the activities of virtual assets market participants applied licensing, taking advantage of positive foreign experience.