World Banking System Research Articles

Unlocking Desire: Exploring the Impact of Seductive Forces of Political Risk, Financial Inclusion, and Competition on Bank Stability in Emerging Markets

This research inquiry overlaps financial services inclusion and a national government's risk of political instability, competition, and banking system stability. It is the analysis of 22 emerging market countries from 2016 to 2021. The research is going to be based on GMM-System dynamic data panel estimate method and the aim is to illuminate the interplay of these factors and to detect their impact on the banking industry sustainability. The point estimates derived from the GMM-System estimation reveal that several of the main conclusions have been reached. The main point to note is that, in general, the more inclusive financial system, the more stable banking sector there will be in the world. What this finding stresses is the necessity of an inclusive financial system to strengthen banks by being a part of the ever-growing body of evidence on how financial inclusion can foster economic growth and stability. Not only does the evidence support the assumption that political unrest and financial markets have a strong relationship, but also the numbers show that this relationship is highly likely. In the case of a country where political instability is reduced, the financial sector turns out to be more viable, the study reveals. Political risk is of a great significance for financial markets and banking systems, and therefore call for political stability as a fundamental for the reliable banking system. Taken together, the finding of the study will be very useful for not only government officials but also the banking sector. The output reaffirms the fact that financial inclusion, competition and political risks are the key components for the sector stability increase. Such factors have a very important influence on the policy, regulation, and strategic decision of banking. These findings show the imperativeness of political and corporate leaders to make progress in increasing financial accessibility, allowing fair competition, and safeguarding political stability so that banking sectors may be reinforced and thus, the world's banking systems may become more resilient.Keywords: Political Risk, Financial Inclusion, Bank Stability, Emerging Economies, Competition.

Growth and poverty reduction in Vietnam: A strategic policy modelling study

<p>A major objective of economic development or growth is poverty reduction, and it is especially a high priority in developing, low-income economies such as Vietnam. Vietnam is an important transition open high-growth economy since Doi Moi in 1987 and with increasing global geopolitical influence in South East Asia but with concerning high poverty incidence. While poverty is recognised internationally as a multidimensional incidence with interdependent relationships among the country's many activities in the sense of Marshall or Haavelmo, rigorous studies with focus on these multidirectional causality issues for Vietnam are currently very limited. The paper addresses these issues by introducing an endogeneity or simultaneous multi-equation modelling approach with World Bank and other international data and system estimation to studying the growth-poverty relationship with Vietnam as a case study. The objective is to explore empirical evidence for this causal relationship with an economy-wide transmission mechanism and with common causality postulates for the improvement of sustainable growth and poverty reduction strategic policy analysis. The main findings show growth-poverty circular causality and the strong impact of growth on poverty reduction and of trade openness on growth. The approach advances the literature, and the findings are also a useful guide for aid consultants, economic researchers, policy makers, nongovernment organizations (NGOs), and official development assistance (ODA) donors in Vietnam in particular and in developing countries in general.</p>

Substantiation of the marketing policy of banks on the basis of statistical analysis of the payment card market

Substantiation of the marketing policy of banks on the basis of statistical analysis of the payment card market

Managing the Capital Transfer Market and Optimizing Management of the World Economic and Banking Systems Under the Conditions of Globalization. Regulating Regulators

Managing the Capital Transfer Market and Optimizing Management of the World Economic and Banking Systems Under the Conditions of Globalization. Regulating Regulators

Banks as existential but uncontested Evil of the world economy (about the 2022 Nobel prize in economics)

The author examines the complex of reasons that prompted the Nobel Committee to award the Nobel Prize in Economics for 2022 to former Federal Reserve System chairman B. Bernanke (2006-2014). The award was granted not only to B. Bernanke, now a leading researcher at the Brookings Institute (Washington, D.C.), as well as to two other American economists - a professor at the University of Chicago, Booth School of Business D. Diamond and a professor of Washington University (St. Louis, Missouri) F. Dybvig for their research of the mechanism of the banking system functioning during financial crises. It is emphasized that the awarding of the Nodel prize to B. Bernanke and two other American economists was politically biased and intended to “rehabilitate” the monetary policy pursued by the FRS in 2007-2009 during the Great Recession. In the long run it led in the early 2020s to record inflation rate in 40 years. During his tenure as Chairman of the Fed, Bernanke, as a supporter of the monetary theory of the Great Depression of the 1930s, proposed in 1963 by the head of the Chicago School of monetarists M. Friedman, deliberately departed from the main regulatory norm of the former monetary policy, formulated in 1993 by Stanford University professor J. Taylor (the so-called “Taylor rules”). It provided for the constant excess of the federal fund rate over the current inflation rate in order to keep the consumer price index growth under constant control of the US monetary authorities. As a result of arbitrary actions by the FRS under the leadership of B. Bernanke, at the end of 2008 the federal fund rate was lowered to zero, and since then it has been consistently below the inflation index. As a result, in the early 2020s, the Fed lost control over inflationary processes in the American economy. These actions of the Fed were a direct consequence of the incorrect diagnosis made by B. Bernanke. He stated that the main threat to the American economy in XXI century, as in the 1930s, is a hypothetical deflationary mode of operation, although since the end of World War II the US economy functioned exclusively in an inflationary mode. Combined with the uncontrolled use of the printing press and exorbitant lending in the period 2007-2009 the Fed managed to minimize the crisis in the US banking system, in fact, to save it, at the cost of transforming the so-called “liquidity trap” into a “debt trap”. The Nobel Prize was awarded to B. Bernanke by the Swedish Central Bank for saving both the American and the leading segments of the world banking system, however, at present, the general population and various sectors of the real economy have to pay for such experiments in monetary policy.

DIMINISHING MUSHARAKAHIN ISLAMIC BANKS: AN ANALYSIS BASED ON HOME FINANCING

Islamic Banking is one of the fastest growing banking systems in the modern world. It has also achieved significant growth in the Pakistani banking sector in the recent decades. Diminishing Musharakah (DM) is an Islamic mode of finance which not only provides home financing facilities to the customers but also provides other long term financing transaction such as machinery and equipment financing in Islamic banks. In September 2020, DM has the largest share in the Islamic banking financing in Pakistan at 34.5 percent. Considering the widespread acceptance of DM, this paper discusses the shariah structure of DM and its use as a home finance product, specifically its variants, in Islamic Banking Institutions. This paper also clarifies the issues which create confusions in the minds of the common public about Islamic banking products, emphasizing the importance of this product for Islamic Banking Institutions

Conceptual provisions of management percentage risk in international practice

In the face of the COVID-19 pandemic world banking system is being severely tested. The last time such shocks occurred during the global fi nancial crisis of 2008–2009. However, the crisis of the global banking system in 2020 caused by the COVID-19 pandemic is very diff erent from the global fi nancial crisis of 2008–2009. During the previous global fi nancial crisis, central banks around the world were able to cut key rates to stimulate the aff ected economy, while the current crisis is taking place in conditions of extremely low and even negative key rates. Consequently, the central banks of the economically developed countries of the world lack one of the most eff ective tools to stimulate the economy in the face of a global crisis. Since the maximum income of commercial banks is generated by the operation of high key rates, the downward trend in recent years is a serious risk to the business of commercial banks. The article analyses the dynamics of key rates in the economically developed countries of the world in comparison with China and the Russian Federation, based on the results of this document, the main trends and patterns were identified, the most dangerous risks for commercial banks are shown. Besides the article discusses the modern conceptual provisions of interest rate risk management in commercial banks of the Russian Federation. They form the basis for the development of constructive methods for assessing commercial risk and the formation of managerial decisions that ensure its prevention or reduction of negative consequences in the event of the implementation of risk events that determine it.

СОВРЕМЕННЫЕ ТЕНДЕНЦИИ РАЗВИТИЯ МИРОВОГО БАНКОВСКОГО СЕКТОРА

The article is devoted to the development of the global banking sector in the context of the digital transformation of the economy, the introduction of platform solutions and the creation of ecosystems that provide the client with a range of financial and non-financial products and services. The author highlights the trends and directions of development of the banking sector, among which many researchers and econo-mists note the presence of facts that are directly related to the conditions of modern social and state develop-ment. A set of trends in the development of the world banking system is proposed, which is directly related to the processes of digitalization of society and the widespread dissemination of information technologies.

Geo-financial stability of the global banking system

The development of globalization creates a need for diagnosis of financial stability at the global level. This study aims to analyze the financial stability of the global banking system and identify threats to stability at the level of geographic regions and countries. The study uses the methods of a structured system, comparative and cluster analysis. The empirical study is based on World Bank data for 126 countries for the period 1998–2017. One of the key results of the study is the development of quantitative indicators of the financial stability of the world banking system. These indicators differ from the existing ones due to the predictive nature of the former. The study also proposes criteria of qualitative assessment of the level of financial stability of the world banking system and its individual elements in the form of regional and national banking systems. In addition, appropriate algorithms were developed to calculate the proposed indicators and criteria. The results helped to form clusters of countries in terms of the level of their banking system stability, compile maps of financial stability risks at the global level, and identify countries that are sources of potential threats to financial stability. The empirical part of the study confirms the practical applicability of the proposed analytical tools. The study shows that in 2017, the banking system of Asian countries moved to the high-risk zone. Potential threats to the financial stability of the global banking system come from the European and Asian banking systems, as well as from the Australian banking system. AcknowledgmentThe study was funded by the RFBR according to the research project No 18 010 00232 “A methodology of multilevel system of diagnostics and regulation of financial stability” year 2018–2020.

The Incoming Revolution in the World Banking and Financial System

Manifold and ongoing developments seem to hint that humanity is just ahead of historic shifts in global banking as well as the financial system. The landmark changes at this moment are unavoidable. The ultra-loose monetary policies practiced by the leading central banks in recent years for a record-breaking period have not resulted in a permanent enhancement of the global economic situation but barely extended the inevitable agony of the current global financial system for additional several years. The COVID-19 pandemic and resultant global economic crisis only made things worse. These simple facts beg the following questions: what future global financial system would probably look like? What currency is going to substitute the role hitherto fulfilled by the crumbling U.S. dollar? How painful the upcoming giant changes will be for societies? What the incoming revolution in geo-economics will mean for geopolitics? Unfortunately, financial boom and bust cycles are not the thing of the past but rather seem to be inextricably linked to the way the modern financial system works. This decisively needs to be reformed. The harbingers of epochal changes are on the horizon. The author will describe them in the paper.

ГЛОБАЛІЗАЦІЙНІ ТЕНДЕНЦІЇ РОЗВИТКУ ОФШОРНОГО БАНКІНГУ

Глобальні умови функціонування світової банківської системи закладають якісно нові умови акумулювання і перерозподілу фінансового капіталу за різними регіонами і секторами світової економіки, а також трансформації сукупних заощаджень економічних агентів різних країн у глобальний інвестиційний капітал. Особливе місце у світовій банківській архітектурі посідає офшорне банківництво, яке в останні десятиліття перетворилось на усталений й невід’ємний компонент глобального фінансового ринку. Охоплюючи операції банківських установ, що локалізовані в офшорних юрисдикціях, офшорний банкінг забезпечує підприємницьким структурам значне послаблення податкового навантаження, високу конфіденційність комерційних угод та надійне збереження капіталу. У той самий час поглиблення міжнародної спеціалізації і виробничого кооперування, фрагментація глобальних потоків товарів і капітальних ресурсів забезпечують економічним суб’єктам широкі можливості щодо застосування послуг офшорного банківського бізнесу у цілях використання особливих систем корпоративного законодавства.
 У статті розкрито масштаби і структурну динаміку офшорного банківництва в останні десятиліття. Комплексно охарактеризовано сучасні тенденції розвитку офшорних банків з акцентуванням дослідницького інтересу на процесах системної технологізації і динамічному поширенні фінтеху і штучного інтелекту, проникнення у даний сектор технологій електронної комерції, його переведення на технології блокчейну, посилення клієнт-орієнтованості і персоніфікованості офшорних банківських операцій, глибокої конвергенції діяльності офшорних банків й міжнародних інвестиційних компаній, активізації злиттів трастових офшорних компаній та ін. Доведено, що дані тенденції відбивають глобальний характер діяльності офшорних банків, високий рівень інноваційності їх сервісів, неухильну диверсифікацію банківських послуг та підвищення рівня стійкості банківської системи до дії чинників світової економічної нерівноваги. Особливу увагу приділено питанню щодо реалізації блокчейн-стартапів та організації бірж з торгівлі цифровими валютами, що справляють вагомий вплив на механізми функціонування офшорного банківництва. Обґрунтовано, що клієнтам офшорних банків надається на сьогодні широкий спектр послуг, що виходить далеко за рамки власне банківського обслуговування, й охоплює також консалтингові сервіси з питань податкового законодавства, оптимізації податкових витрат, заснування офшорного бізнесу тощо.

Market Concentration and Income Diversification: Do They Always Promote the Financial Stability of Banking Industry?

This paper analyzes the effects of market concentration and income diversification on the financial stabilityof the world banking system. It uses the GMM estimator proposed by Arellano and Bover (1995) to study 206 countries between 1994 and 2015. The results show that market concentration and income diversification have a positive and nonlinear effect on financial stability; and a negative and nonlinear effect on bank risk. The nonlinearity shape suggests that the effects are reversed when the banking industry has a higher market concentration and income diversification. In these cases, lower levels of stability and higher risks would characterize the banking industry. Nonlinearity establishes threshold values that are relevantfor the empirical discussion oriented to an optimal design of financial policies and banking strategies.

Study of the impact of the blockchain system on the world banking system in the economic and prognostic aspect

Study of the impact of the blockchain system on the world banking system in the economic and prognostic aspect

U.S. CITIES IN THE GLOBAL BANKING SYSTEM (1970s - 2010s)

Based on statistical data and other information, the article traces how the place of the United States of America in the world banking system was changing over the course of several decades. Such monitoring is carried out simultaneously at two levels: both in relation to the country as a whole, and to its most important cities. Research begins at the turn of the 1960s-1970s and extends to the present (the choice of the starting chronological point is determined by the fundamental shifts in the world economy that took place during that period, as well as by the emergence in 1970 of accessible and reliable statistical reports of an international scale). The set of quantitative indicators reflecting the ups and downs in the history of American banking business is considered in parallel with similar data for the main competing forces, namely Western Europe, Japan and China. The measurements show that in the 1970s and 1980s the share of the United States in the global banking was usually declining. The centre of credit activity then moved to Japan and partly to Europe. Such shifts were explained by both the relatively slow development of the US economy and a number of legal restrictions that American banks faced within their own country. Reforming of the national financial sector, carried out in several stages during the 1980s - 1990s, yielded contradictory but mostly positive results. From 1994-1995, US shares in the global banking began to rise, and then stabilized at relatively high levels. The American successes, for all their moderation, seemed to be a significant achievement, given that even the most powerful newest factor, the enormously fast strengthening of China, could not block them. Positive changes for the United States were connected with the ability to modernize national legislation rather flexibly and quickly, as well as with the maintenance of significant internal competition between cities (in comparison with the more monopolized banking areas of Europe and the largest Asian countries).

Japan’s bank monetary policy in the context of global crisis

Мировая банковская система непрерывно развивается и совершенствуется. Банковские системы отдельных стран модифицируются под влиянием интеграции финансовых отношений государств мира и глобализации в сфере банковского дела. Экономика Японии получила широкое развитие в период так называемого «экономического чуда», во время которого Япония стала второй страной в мире по общему объёму производства, занимая третье место по экспорту продукции. Быстрыми темпами развивается непроизводственный сектор Японии: сфера услуг, финансы, научно-исследовательская деятельность. Статья посвящена изучению деятельности центрального банка Японии – одного из ведущих мировых финансовых институтов. Выделены организационные принципы функционирования Банка Японии. Рассмотрены три руководящих принципа управления, используемых Банком Японии в процессе его деятельности для выполнения роли центрального банка и достижения таких целей, как поддержание ценовой стабильности и содействие экономическому росту в стране. Банк Японии, будучи первым звеном банковской системы страны, реализует денежно-кредитную политику, применяя комплекс мер, направленных на управление совокупным спросом через условия денежного рынка. В статье отражены инструменты денежно-кредитной политики, применяемые Банком Японии для обеспечения стабильности экономического развития страны. Особое внимание уделяется мерам, предпринятым Банком Японии в связи с кризисом, вызванным пандемией коронавируса COVID-19. Речь идёт о поддержке компаний, пострадавших от последствий коронавируса COVID-19, включая предоставление беспроцентных займов, выдачу гарантий по кредитам малому и среднему бизнесу, пострадавшему от пандемии, субсидии по переводу бизнеса в онлайн. Банк Японии планирует использовать пакет фискальных и монетарных антикризисных мер для поддержки экономики страны. Реализация мероприятий необходима для ограничения экономического ущерба от кризисных явлений, вызванных коронавирусом COVID-19, и сглаживания волатильности рынков. Актуальность исследования обусловлена тем, что в условиях финансовой глобализации необходимо учитывать опыт зарубежных банковских систем, особенно в ситуации мирового кризиса, затронувшего экономики всех стран. Ключевые слова: мировая банковская система, глобализация, банковское дело, Япония, центральный банк, денежно-кредитная политика, операции на открытом рынке, экономическая активность, ликвидность, COVID-19, финансовый кризис, антикризисные меры. The world banking system is constantly developing and improving. The banking systems of individual countries are modified under the influence of the integration of financial relations between the countries of the world and globalization in bank-ing. The Japanese economy was widely developed during the period of the so-called «economic miracle», during which Japan became the second country in the world in total production volume, ranking third in the export of products. The non-manufacturing sector of Japan is developing rapidly: the service sector, finance, and research. The article is devoted to the study of the activities of the Central Bank of Japan – one of the leading global financial institutions. The organizational principles of the Bank of Japan are highlighted. Three management principles used by the Bank of Japan in the course of its activities to fulfill the role of the central bank and achieve goals such as maintaining price stability and promoting economic growth in the country are considered. The Bank of Japan, being the first link in the country's banking system, implements monetary policy by applying a set of measures aimed at managing aggregate demand through money market conditions. The article reflects the monetary policy instruments used by the Bank of Japan to ensure the stability of the country's economic development. Particular attention is paid to the measures taken by the Bank of Japan in connection with the crisis caused by the pandemic of the coronavirus COVID-19. It is about supporting companies affected by the consequences of the coronavirus COVID-19, including providing interest-free loans, issuing guarantees for loans to small and medium-sized businesses affected by the pandemic, subsidies for transferring business online. The Bank of Japan plans to use a package of fiscal and monetary anti-crisis measures to support the country's economy. Implementation of measures is necessary to limit the economic damage from the crisis caused by the coronavirus COVID-19, and to smooth out the market volatility. The relevance of this study is due to the fact that in the context of financial globalization, it is necessary to take into account the experience of foreign banking systems, especially in the situation of the global crisis that affected the economies of all countries. Keywords: world banking system, globalization, banking, Japan, central bank, monetary policy, open market operations, economic activity, liquidity, COVID-19, financial crisis, anti-crisis measures.

The problems of assessing the competition of commercial banks through the index lerner

In this article, the methods of assessing the level of competition in the foreign banks market are analyzed in depth. On the basis of the index Lerner, the level of competition in the credit (deposit) market of commercial banks of the republic is assessed on the basis of the indicators of banks. In the world banking system, the importance of managing bank risks, assessing creditworthiness, financial stability of banks, financial management in crisis management, promoting a competitive market, attracting foreign investors and increasing customer confidence in the bank is growing. At the same time, the bank must choose the upper and lower limits when setting interest rates for customer service. In a competitive environment, the banking system and the market are closely interconnected. The first defines classifications in a general area that defines the microeconomics of blood vessels, and the second defines the main characteristics of microeconomics. A study by Boone (2008) on the indicator of resistance to increasing its market share can be cited. The indicator of the H-statistics method (with the exception of Bun) in Panzara-Ross was widely used because it is easy to calculate with little use of data compared to other estimation methods. Only the Lerner index is an indicator of microeconomic assessment, while other indicators are accepted as an assessment of industry competition. Subsequently, new indicators were developed to summarize the two blocks. Mention is made of the local optimization method provided by Mantos Delis (the local maximization method).

Restructuring of International Finance for Sustainable Development of The Global Economy

The global crisis of 2008–2009 and its long post-crisis recession have raised questions about the future structure of the world economy. The crisis is viewed as a crash of the basic elements of the global economy’s system. The international markets of financial assets failed to regulate themselves and aggravated conflicts between global and national finance. In 2010–2019 the world economy faced the risks for sustainable development. Deglobalization and dedollarization procedures questioned the previous philosophy and world economic leadership. According to the main results of a research, international financial institutions have deficiency of means for the solution of civilization problems. The world banking system, enhancing capital base according to BIS III, is defenseless against a big share in balance of derivatives and off-balance obligations. The post-crisis economy is unstable before the risks of dropping rates by 70% of the world’s economy. The system’s solution to problems of ensuring sustainable development relies on “three whales”: change of the domestic economic policy in the direction of structural reforms for the 4.0 Revolution, ensuring productivity growth, smooth transition to a flexible exchange rate, decrease in the public and corporate debts; transition to cross-border policy without tariff wars; and focus of the world economy in civilization’s problems, quitting a competition for leadership in favor of the multipolar world, orientation to quality of life and SDR as the reserve currency.

On being companions and strangers: Lawyers and the production of international climate law

AbstractInternational climate law is often represented as a set of rules and institutions that scholars have tracked for nearly 30 years, whether to document them, assess their effectiveness, or prescribe reforms. This article, in contrast, adopts a critical perspective to uncover the everyday life of international climate law. From this viewpoint, international climate law is a purposive endeavour that is grounded in the small places where people create and live out the law. ‘International climate lawyers’ are among those who produce the law within these sites, and they propagate international climate law across multiple institutions. Using legal-ethnographic description, the article shows how lawyers operationalize the law in the United Nations climate regime, World Bank, and international human rights system. In each case, lawyers effect some overlapping aspirations for the law as well as legal techniques, but they also adapt their practices to the places where they work. In the process, they simultaneously build and diversify their professional community. Both in their field and community then, lawyers generate heterogeneity and homogeneity through the proliferation of international climate law. They do so on multiple registers, in terms of diverging ethical commitments, multivalent legal forms, and relative authority to speak the law, notably between institutions and the Global North and Global South. If lawyers reproduce sameness and difference in international climate law, moreover, this article suggests they may reify analogous traits in the broader field of international law, including persisting power relations.

WORLD BANKING SYSTEM: POST-CRISIS RECOVERY?

The article studies the state of the world banking system recovery after the global crisis. It is stated that by the indicators of financial depth, capital adequacy and profitability of the biggest banks the world banking system is nowadays the most stable and profitable for the entire post-crisis period of its development. It is noted that the structure of the modern world banking system corresponds to the spatial structure of the world economy, which consists of different taxonomic levels of regions and where the role and importance of global regions is being enhanced against the background of the globalization processes deepening. Based on the study of changes in the distribution of bank assets and banks’ profits between global regions, the rankings of the biggest banks in the world, indicators of return on assets and return on equity of banks from different regions, regional peculiarities of mergers and acquisitions in the banking sector, progress in the implementation of the requirements of the Basel Committee on Banking Supervision, regional features of the post-crisis recovery of the world banking industry are identified. It is proved that there is an increasing degree of unevenness in distribution of bank assets between global regions, and a tendency of increasing bank assets concentration in three main regions – Asia Pacific, American and European regions – is found out. On the basis of assessment of the transformational shifts in the regional structure of the world banking industry changes of the global regions role in the world banking system in the process of its post-crisis recovery are identified.

NEW APPROACHES TO BANKING BUSINESS MODELS IN THE DIGITAL ECONOMY

The factors of the post-crisis development of the world banking system, the strengthening of the role of information technology in all industries, the increasing role of innovative Fintech intermediaries in the banking market encourage the management of banks to revise traditional business models and to form new approaches to managing the modern bank. In the article the authors aimed to investigate the impact of digitization on the choice of banking business model and the development of algorithm for estimating a bank’s business model. Traditionally banks choose one of five business models: lending, high leverage, investment, fee, margin. Most operating banks opt for traditional models because the business environment requires it. However, maintaining the bank’s competitiveness, enhancing its efficiency and resilience to financial imbalances is possible by building an innovative business model that takes into account the modern diffusion of information technology and the functioning of FinTech companies as an alternative to traditional banking business. Although nobody knows yet what will replace the current business model, there are currently three approaches to assimilating FinTech in banking: the Financial Control Center, Banking-as-a-Service, the Niche Bank. The choice of the banking business model and its transformation should be accompanied by an assessment of the bank’s business model. Thus, an important component of banking management in an unstable environment is the analysis of the business model of the bank and its transformation in order to minimize the impact of possible negative effects of financial crises on the performance of the bank. The proposed algorithm for estimating a bank’s business model includes 6 stages: preliminary assessment of the main components of the bank’s business model; assessment of the business environment of the bank; stress testing of the viability of the bank’s business model; evaluation of the bank’s strategy; identification of key vulnerabilities to which the bank’s business model is prone or likely to be vulnerable; and justification of the results and formation of effective conclusions. Keywords: banks, banking business model, banking management, digital economy, business model innovation.