Paranytsia N., PhD (Economics), Associate Professor, Associate Professor of the Department of Management Accounting, Business Analytics and Statistics, University of the State Fiscal Service of Ukraine, Irpin, Ukraine

ORCID ID: 0000-0003-3682-4979
e-mail: n_paranytsya@ukr.net

Chubenko V., Master of Department of Banking and Financial Monitoring, University of the State Fiscal Service of Ukraine, Irpin, Ukraine

Problems and Directions of Improvement of the Banking System of Ukraine

Abstract. Introduction. The banking system plays an important role in ensuring the conditions for the real creation of the market mechanism. It is part of a single economic organism, concentrating huge sums of money, serving the current production needs and investment needs of enterprises. The banking system, being one of the most important links in the economy, influences the life of society as a whole. Not only does it ensure cross-sectoral and inter-regional redistribution of monetary capital, but it is also a key element of the settlement and payment mechanism of the country’s economic system.

Purpose. Important components of solving banking problems are: reduction of systemic and credit risks of banking activity, cost of banking services, first of all credit, for the real sector of economy and population; increasing the timing and reducing the cost of resources attracted by banks; improving the quality of own funds (capital), reducing the costs of credit institutions, primarily due to the unjustified administrative burden placed on banks. To ensure the sustainable development of the banking system, a number of problems need to be addressed: low capitalization of the banking system; high credit risks; dominance of short-term liabilities in the resource base; the level of protection of creditors whose claims are secured by collateral does not meet the requirements of international practice; the inability of commercial banks to build a quality resource base; unmet economic need for credit and banking services; the level of trust in financial intermediaries; industry specialization of commercial banks; banks’ passive lending policy; it is difficult for banks to perform a redistributive function; the colossal cash flow in cash, outside the banking system; domestic banks occupy rather modest positions in the world in terms of capital size and assets value.

Conclusions. The banking system is the most important link in the economy, which has a huge, versatile impact on society. It concentrates the enormous amount of money that it redistributes between industries and regions.

Results. It has been argued that solving these problems will increase the stability of the banking system, will significantly increase the role of the banking system in the economy, will facilitate the development of credit relations of credit institutions with the real sector of the economy. Proposed measures to increase the stability of the banking system, which can be divided into the following blocks: financial, tax, organizational, personnel, economic.

Keywords: banking system; lending; banking risks; problems of the banking system; economic development.

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