MODELING THE INFLUENCE OF THE STRUCTURE AND QUALITY OF ASSETS ON THE PROFITABILITY OF A COMMERCIAL BANK

2021 ◽  
pp. 10-18
Author(s):  
Alena S. Kudriavtseva ◽  
Olga G. Arkadeva
Keyword(s):  
Economic Analysis ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Factors Affecting ◽  
Correlation And Regression Analysis ◽  
The Stability ◽  
Classical Economic ◽  
Sound Management

In modern conditions, the methods of classical economic analysis are not enough to solve the problem of bank stability. This requires the development of methods and tools to analyze the current situation in the bank and to develop sound management decisions aimed at ensuring the stability of the bank. The article notes that the analysis of the influence of the structure and quality of assets on the profitability of commercial banks is an important step for assessing the financial position and reliability of a bank, and a method is proposed for constructing a model of the dependence of bank’s profitability on the factors that determine it. The scientific sources were the works of Russian and foreign researchers in the field of modeling and characteristics of the banking system, financial stability of credit institutions, assessment of the creditworthiness of potential borrowers, system organization and information technology. The article uses the methods of economic analysis, differential calculus and mathematical statistics, as well as the achievements of the main scientific schools dealing with the problems of economic and mathematical modeling and economic analysis of banking. In order to determine the most significant economic factors affecting the profitability of commercial banks, generalization of the theoretical, methodological and applied aspects of studies devoted to the study of the influence of the structure and quality of assets on the profitability of commercial banks was carried out, and a correlation and regression analysis was made. The model presented in the article can be used to predict changes in the profitability of Russian commercial banks and to predict promising directions for growth in profit and profitability of the bank.

scholarly journals Contents and principles of stability of the banking system

2019 ◽  
Vol 27 (1) ◽  
pp. 63-71
Author(s):  
Hadir H. Shubbar ◽  
Andrey V. Guirinsky
Keyword(s):  
Financial Stability ◽  
Banking System ◽  
Surveillance Systems ◽  
Banking Supervision ◽  
Basic Principles ◽  
Factors Affecting ◽  
The Stability ◽  
Future Work ◽  
The International Monetary Fund

The main approaches to understanding the essence of “stability of banking system” are conducted in the article. The basic principles are also given, inherent in a stable banking system. Further, the main factors affecting the stability of the banking system are considered. The article determined the components of ensuring the assessment of the bank’s financial stability. The basic principles of effective banking supervision are the actual minimum standard for prudent regulation and supervision of banks and banking systems. Initially issued by the Basel Committee on Banking Supervision in 1997, they are used by countries as a guide to assess the quality of their surveillance systems and to determine future work towards achieving a basic level of rational oversight practices. The core principles are also used by the International Monetary Fund (IMF) and the World Bank in the context of the Financial Sector Assessment Program (FSAP) to assess the effectiveness of banking supervisory systems and country practices.

scholarly journals FINANCIAL STABILITY OF A BANK - FACTOR OF STABILITY OF BANKING SYSTEM

2018 ◽  
pp. 5-11
Author(s):  
Andrii Ramskyi ◽  
Inna Budnichenko
Keyword(s):  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Development Program ◽  
Financial Sustainability ◽  
Internal Factors ◽  
Financial Condition ◽  
Stage Of Development ◽  
Banking Institutions ◽  
The Stability

The article is devoted to the analysis of the financial stability of Ukrainian banks at the present stage of development and the identification of the main factors of influence that are associated with it. The main tendencies of development of the banking system of Ukraine are considered. The present state of the banking system of Ukraine is determined. Financial stability plays a significant role in planning the activities of commercial banks. In general, its indicators reflect the level of riskiness of the functioning of the entity of the banking system. Managing financial sustainability has a significant impact on the functioning of banks. That is why it is necessary to create special control departments in banking institutions. The research of financial stability of banks is based on financial sustainability indicators developed and used by the IMF and the World Bank as the basis for the "Integrated Financial Sector Development Program until 2020". The necessity of applying different methods for evaluating the financial stability of commercial banks has been established in order to identify a wider range of problems related to the efficiency of the functioning of the banking system. The description of  two main groups of factors, under the influence of which the financial stability of banks  undergoes changes, is presented. It was revealed that external factors have a more significant impact on the financial stability of a bank. In particular, the factors of mega environment have become more important when banks enter the international financial space. Internal factors lie mostly in the management plane, and it is just the inefficient management of the bank that leads to the disruption of its stable financial condition. Specific features of management of financial stability and methods of its evaluation are considered. The analysis of economic standards of the banking system of Ukraine is carried out. The measures are proposed to minimize the risks and maintain the stability of banking institutions at the required level for normal functioning in modern conditions. It has been proved that providing, supporting, analyzing and evaluating the financial stability of commercial banks is a driving force in the development of the banking system, and hence the entire Ukrainian economy.

scholarly journals Management of Liquidity Risk and the Banking Activity

2019 ◽  
Vol 8 (2) ◽  
pp. 01-08
Author(s):  
Leonora Haliti Rudhani ◽  
Driton Balaj
Keyword(s):  
Commercial Banks ◽  
Financial Stability ◽  
Banking Sector ◽  
Banking System ◽  
Liquidity Risk ◽  
Risk Indicators ◽  
Liquidity Management ◽  
Banking Activity ◽  
The Stability ◽  
High Level

The banking sector in Kosovo continues to have a high level of sustainability and financial stability. Two substantial components for the stability of the banking system appear to be liquidity and liquidity risk. The purpose of this paper is to analyze liquidity management in Kosovo's commercial banks through liquidity risk indicators from 2008 to 2017. By comparing the methodology of the data presented, the study will assess the state of management of the liquidity risk of commercial banks. From 2008 until now, commercial banks in Kosovo have had liquidity reserves at a level higher than the level required by CBK, which means that exposure to liquidity risk was minimal.

scholarly journals DYNAMICS OF MAIN INDICATORS OF THE CANADIAN BANKING SYSTEM

2020 ◽  
Vol 6 (3) ◽  
pp. 136-142
Author(s):  
Maryna Korol
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Banking System ◽  
Practical Significance ◽  
Loan Portfolio ◽  
The World ◽  
The Stability ◽  
Canadian Banking

Relevance of research. During the global financial collapse of 2008–2009, Canadian banks demonstrated stability and vastly avoided the international crisis. There was a view that Canada’s banking system was strict and overly risk-oriented, but after the crisis, it was recognized as logical in terms of lending, which required careful government supervision and regulation based on the principles of security and reliability. In fact, the World Economic Forum recognizes Canadian banks as the most stable in the world. So, all mentioned above prompted us to study the dynamics of the main indicators of the Canadian banking system. The aim of the study is to summarize and characterize the existing trends of banking system evolution in Canada. Methodological basis of the study is based on the analysis of the study of the Canadian banking system according to the indicators of the number of banking institutions, their profitability / loss, the quality of the loan portfolio and analysis of the largest banks in the country. A systemic analysis of the quantitative and qualitative composition of the above-mentioned banking indicators, synthesis and generalization were used to generalize and formulate conclusions. Scientific results. This article is devoted to the study of the dynamics of the main indicators of the Canadian banking system during the period from 2000 to 2019 inclusively. It is argued that the number of commercial banks has had a positive dynamics during the analyzed period, even the period of the global financial crisis of 2008-2009 has not reduced their number, which indicates the stability and prudent policy of commercial banks and the Central Bank as a whole. It has been established that 2019 is the year of the historical maximum assets of the Canadian banking system (more than 277% of Canada’s GDP). It is shown that the assets of eight largest banks in Canada account for 91% of the total assets of the banking sector. A record decline in the bank’s profits was recorded in 2009. The quality of the loan portfolio of commercial banks in Canada since 2009 shows a significant decrease in the share of outstanding loans. The practical significance of the study is to rate the strengths and weaknesses of the Canadian banking system. Significance / originality. The results achieved form an integrated view of the functioning of the Canadian banking system. The following studies will focus on methods and models for verifying the stability of banking systems, including the Canadian banking system.

scholarly journals Efficiency of Commercial Banking in Developing Countries

Mathematics ◽  
2021 ◽  
Vol 9 (14) ◽  
pp. 1597
Author(s):  
Violeta Cvetkoska ◽  
Katerina Fotova Čiković ◽  
Marija Tasheva
Keyword(s):  
Developing Countries ◽  
Commercial Banks ◽  
Feasible Solution ◽  
Banking System ◽  
Efficiency Score ◽  
Commercial Banking ◽  
Real Situation ◽  
Super Efficiency ◽  
Bank Management ◽  
The Stability

The aim of this paper is to evaluate the relative efficiency of commercial banks in three developing countries in Europe (North Macedonia, Serbia, and Croatia) in the period from 2015 to 2019, and to provide targets for improvement for the inefficient banks by using DEA. The variables are selected under the income-based approach. Based on the output-oriented BCC model, unusual results are obtained for a few commercial banks in each country, that is, they are BCC relative efficient, which is contrary to the real situation. In order to identify outliers that can affect the efficiency results, a super-efficiency procedure is applied so that banks with a super-efficiency score higher than 1.2 (outliers) or for which a feasible solution was not found are considered in detail and removed, and then the output-oriented BCC model is rerun. Based on the obtained results, the Macedonian commercial banking system shows the highest efficiency (91.1%), followed by the Croatian (90.9%) and the Serbian (81.9%) banking system. The estimated targets for improvement of the inefficient commercial banks could help their top bank management in better resource allocation and making fact-based and faster decisions by which they can improve the operation of the banks they lead and contribute to the stability of the financial system.

scholarly journals TO IMPROVE THE ANALYSIS OF THE FINANCIAL SECURITY OF THE BUSINESS IN GEORGIAN ENTERPRISES

2020 ◽  
pp. 135-147
Author(s):  
IZOLDA CHILADZE
Keyword(s):  
Financial Management ◽  
Financial Stability ◽  
Factor Model ◽  
Limited Liability ◽  
Sustainable Growth ◽  
Sustainable Business ◽  
Growth Trend ◽  
Factors Affecting ◽  
The Stability ◽  
And Control

The purpose of this paper is to improve the analysis of the financial stability of enterprises and to identify the key factors affecting the establishment of the sustainable growth trend of enterprises (except the financial sector) in Georgia. Answering the question: what financial challenges do enterprises in Georgia face today and be designed consequently, recommendations for strengthening the financial stability of enterprises should be developed in Georgia, increasing solvency and mitigating bankruptcy risks? The necessity for the financial stability of enterprises is becoming increasingly important both for sustainable business growth and for the stability of the international financial market.The subject of the study is the financial positions and financial results of the analytical enterprises. The first and second categories of joint-stock companies of Georgia and limited liability companies were selected as the research objects. Ten enterprises in total. The research methodology includes methods of economic and statistical analysis, factor analysis, vertical, horizontal, proportional and ratio analysis.In order to improve financial management and control, the paper presents multi-factor models of several indicators created by the author. These are: the tree-factor model the coefficient of the organic structure of capital, an eight-factor model of profitability and a six-factor model of the Financial leverage. The paper conducts practical research on the example of ten Georgian companies and concludes that the main challenges in today›s Georgia are the dangers of losing financial stability and bankruptcy. The reason for such a tense financial situation is not a «Corona-19». According to the author, the main reasons for the instability of enterprises in Georgia are: The Irresponsibility of business owners and management, low management professionalism and hidden flows of cash resources.

Risk Behavior, Country Governance, and Bank Stability in Pakistan

2021 ◽  
pp. 185-203
Author(s):  
Hafiz Waqas Kamran ◽  
Abdelnaser Omran
Keyword(s):  
Economic Growth ◽  
Credit Risk ◽  
Risk Behavior ◽  
Commercial Banks ◽  
Financial Stability ◽  
Operational Risk ◽  
Bank Stability ◽  
Regression Methods ◽  
The Stability ◽  
Control Of Corruption

Keeping risk behavior and country governance in observation, this study has investigated the trends in financial stability for a sample of 22 commercial banks in Pakistan while controlling the effect of economic growth. Over the period of 2007 to 2016, the authors have applied OLS, FE, and RE regression methods to investigate which risk and governance factors are influencing the stability measures of the banks. It is found that financial stability in overall banks is affected by credit risk, operational risk, country risk, and financial crisis risk while control of corruption is also affecting ZROA in an adverse way.

Features of Forming of Profits of Commercial Banks in Terms of Coronaries

2020 ◽  
Vol 8 (6) ◽  
pp. 75-82
Author(s):  
A. Novikov ◽  
A. Zverev ◽  
M. Mishina
Keyword(s):  
Commercial Banks ◽  
Banking System ◽  
Internal Factors ◽  
Russian Economy ◽  
Internal Characteristic ◽  
The Stability ◽  
Constituent Elements ◽  
The Impact ◽  
Entire Economy

A significant role of the banking system in ensuring the functioning of the entire economy, by means of organizing the movement of borrowed capital between individual industries and the implementation of financial needs is achieved only if this system, and therefore its constituent elements, are stable. In this regard, the stability of the banking system should be considered as a fundamental internal characteristic, which ensures the existence and stable development of the Bank in a market economy under the influence of external and internal factors. In 2020, commercial banks were faced with the impact of the coronavirus pandemic on the Russian economy and the banking system in particular. At the same time, the current situation of banks ' functioning is characterized not only by the presence of a corona crisis, but also by the internal development of the system itself, which, following the uberization of the world economy, dictates to commercial banks the need to develop and implement financial technologies and form ecosystems. In these conditions, the need for commercial banks in financial resources increases, which is reflected in the increasing role of profit in the Bank's activities and development. This article focuses on the impact of the coronavirus pandemic on the banking system of the Russian Federation and the economy as a whole, and also identifies the features of profit formation and the specifics of the functioning of commercial banks in the coronavirus crisis period.

scholarly journals PROBLEMS OF ENSURING THE FINANCIAL SUSTAINABILITY OF THE BANKING SYSTEM

2021 ◽  
Author(s):  
Olena Tarasova
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Banking System ◽  
Bank Lending ◽  
Financial Sustainability ◽  
Loan Portfolio ◽  
Bank Deposits ◽  
High Inflation ◽  
The Stability ◽  
Banking Institution

The article explores the problems of ensuring the financial sustainability of the banking sector, which plays a very important role in the functioning of the financial system of the state. The role of the stability of the banking system in ensuring conditions of economic growth is justified. It is noted that it is the financial stability of each banking institution that is a prerequisite for the stable functioning of the entire banking system. It is emphasized that since the financial stability of the banking system is influenced by a large number of internal and external factors, for the effective functioning of the banking system of the country must be ready for any challenges to the macro and microenvironment. The main problems of the banking system in modern conditions should be considered the reduction of deposits of the population, deterioration of the quality of the loan portfolio, significant devaluation of the hryvnia, high inflation rates, loss-making of a significant number of banking institutions. It was concluded that the banking system of Ukraine feels a significant dependence on the funds of depositors - individuals, and therefore on factors that affect their behavior in the financial market. Trends of formation of deposit base of commercial banks of Ukraine and imbalances in the sphere of attraction of banking resources were analyzed. The growth of bank deposits of the population is slow, negative changes in their structure are observed. The share of deposits of individuals after the 2014 crisis has become significantly more volatile and risky in terms of financial stability. The increase in lending is complicated by the presence of large portfolios of problem loans, as a result of which there are a number of tasks to increase the efficiency of the loan portfolio, which should ensure a compromise of profitability, liquidity and credit risk acceptable to the bank. The priorities of monetary policy and the main tasks are formulated, the solution of which will allow to intensify lending to the real sector of the economy. Theoretical and practical recommendations have been developed to improve bank lending, increase the profitability of the banking system and capitalize Ukrainian banks.

scholarly journals Peculiarities of ensuring financial sustainability of the Ukrainian banking system

2018 ◽  
Vol 13 (1) ◽  
pp. 184-195
Author(s):  
Olha Vovchak ◽  
Viktoriia Rudevska ◽  
Roksolana Holub
Keyword(s):  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Developed Countries ◽  
Equity Capital ◽  
Capital Adequacy ◽  
Financial Sustainability ◽  
Bank Capital ◽  
Strategic Objective ◽  
Capital Ratios

Ensuring and strengthening the financial sustainability of banks is a difficult and not completely resolved task. It is inherent not only to developed countries, it has also be¬come nationally important in Ukraine, which was largely predetermined by the specifics of the domestic banks development. This is explained, in particular, by the banking insti¬tutions’ focus mainly on the relatively short-term activity, the need to work under high risk, resulting from economic and political instability in the country. Therefore, nowa¬days, it is urgent for each Ukrainian bank to focus on the main strategic objective – effec¬tive management and ensuring financial sustainability. The purpose of this study is to assess the current state and identify the features of ensuring financial sustainability of the banking system of Ukraine.It was pointed out in the study that the negative tendency to increase the number of in¬solvent commercial banks during 2012–2017 indicates problems with providing finan¬cial sustainability to commercial banks. The tendencies have been revealed that testify to the problems of the banking system capitalization in Ukraine, which greatly affects its financial stability. Given the analysis of indicators of banks financial sustainability that characterize the bank capital adequacy, the conclusion is made on ambiguous as¬sessment of sufficient level of capitalization, since despite the correspondence of most values of coefficients to the indicators, there is a lack of capitalization of the domestic banking system and equity capital concentration. In general, the results made it pos¬sible to identify trends in the development of capital ratios and financial sustainability indicators and to shape appropriate measures to increase the level of capitalization in order to ensure the financial sustainability of the banking system.

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