Olha Melnyk, Candidate of Economic Sciences, Associate Professor of the Department of Finance, Banking and Insurance, Mykolayiv National Agrarian University, Mykolayiv, Ukraine

ORCID ID: 0000-0001-8639-7755
e-mail: melnikoi@mnau.edu.ua

Inna Baryshevska, Candidate of  Economic Sciences, Associate Professor of the Department of Finance, Banking and Insurance, Mykolayiv National Agrarian University, Mykolayiv, Ukraine

ORCID ID: 0000-0003-3851-160X
e-mail: Baryshevskaiv@mnau.edu.ua

Iryna Cheskidova, applicant of higher education, Mykolayiv National Agrarian University, Mykolaiv, Ukraine

ORCID ID: 0000-0003-3617-5833
e-mail: Irina.cheskidova17@gmail.com

Risk Minimization as a Component of Ensuring the Financial Stability of the Banking Sector of Ukraine

Abstract. Introduction. Banking activity, like any other, is accompanied by the presence of risks caused by the specifics of the relevant operations. Taking into account the effect of economic factors, the instability of the political situation, and crisis phenomena, it is important to stabilize the financial stability of the banking sector of Ukraine and further improve the mechanism for ensuring the financial stability of the banking system. Starting from 2022, the economic security of the banking system was significantly disturbed as a result of the pandemic and the introduction of quarantine measures, which in turn increases the level of banking risks. Thus, part of the borrowers of banking institutions is characterized by the inability to meet their obligations. Therefore, the state government and the National Bank of Ukraine implemented measures aimed at minimizing banking risks.

Purpose. The purpose of the article is to study the modern risks of banking activity as a component of the mechanism for ensuring the financial stability of the banking sector of Ukraine, as well as to determine directions for their minimization.

Results. As a result of the implementation of the risks of banking activity during the martial law, banking institutions suffered quite significant losses, especially due to the deterioration of the quality of the loan portfolio. The least risky instrument on the Ukrainian stock market is government bonds, as the risks of default in the national currency of the government are much lower than those of other issuers. Thus, the credit risks of bonds of domestic government loans are almost absent. Basel standards and European banking legislation allow setting zero capital requirements for credit risks of securities in the national currency.

Conclusions. For the further effective functioning of the banking sector and the minimization of risks, it is important to: comply with the requirements of the NBU by banking institutions; strengthening of financial controlling; timely informing the NBU about violations of capital and liquidity, as well as about possible risks of such violations; improvement of the cyber protection system.

Keywords: financial stability; risks; banking sector; banking system; banking institutions.

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