|JEL Classification: E44, E 58, G 21
Sukach Olena, PhD in Economics, Department of Finance, Banking and Insurance, East European University of Economics and Management, Ukraine
ORCID ID: 0000-0001-7150-0262
Risk Minimization as a Tool to Ensure the Banks Security
Annotation. Introduction. The banking system of Ukraine, in the conditions of the current crisis, turned out to be untenable to quickly adapt to structural changes in the economy, which manifested itself in the absence of an effective system for managing banking risks. Further instability in the financial market will increase the negative impact on the level of financial security of the banking sector. Today there is a need for the formation of preventive measures for risk management, prevention of their occurrence and minimization, which will contribute to the safe position of the bank. Purpose. The main purpose of the study is to identify modern methods and approaches regarding the classification of banking risks and substantiation of proposals for their minimization, as well as ensuring the financial security of the banking sector in Ukraine. The main research methods are methods of quantitative, qualitative analysis and statistical analysis, as well as methods of expert assessments. Results. Summarizing the results of research by scientists, it was stated that banking risk is the likelihood of losses in the form of loss of assets, shortfall in planned income, or the appearance of additional costs as a result of the bank’s financial transactions. The main results of the banking system of Ukraine in 2019 and the dynamics for 7 months of 2020 are determined. Despite the positive trends of 2019, there is a risk of new problem loans due to non-conservative policy of banks in the growing segment of consumer lending. Modern practice shows that any credit product of a bank leads to the formation of a certain credit risk, and until the client returns the received resources, the bank is forced to form reserves for possible losses from non-repayment of funds.
Conclusions. Сonclusions are drawn regarding the credit risk management tools. Based on the results of the study, the author’s approach to the classification of risks and reasonable approaches to their management are presented. In particular, it has been proved that during the formation of risk management tools, namely credit risk, and ensuring the bank’s security, it is necessary to take into account that risk assessment indicators should consider not only the ratio between assets and liabilities, but also their maturity dates.
Keywords: bank; banking risk; liquidity; risk management.
- Data of supervisory statistics. Retrieved from: https://bank.gov.ua/ua/statistic/supervision-statist/data-supervision.
- Primostka, L. (2004). Economic risks in the activities of banks. Banking, 3, 17-23.
- Kozmenko, S. M., Shpyg, F. I. & Voloshko, I. V. (2003). Strategic management of the bank. Sumy: University Book.
- Prasolova, S. (2007). Problems of assessment and management of interest rate risk of commercial banks: current aspects. Bulletin of the NBU, 9, 36-39.
- Milner, B., Liis, F. (2001). Management of a modern company. M.: INFA.
- Burdenko, I. & Pozhar, O. (2006). Disclosure of information about banking risks in financial statements. Bulletin of the NBU, 7, 50-54.
- Risks of banking. URL: https://bank.gov.ua/ua/glossary/show/219.
- Basic principles of effective banking supervision: Document of the Basel Committee on Banking Supervision (materials BCBN, September 1997). Retrieved from: http://www.bank.gov.ua/Bank_supervision/index.
- On approval of the Regulations on the organization of risk management system in banks of Ukraine and banking groups: Resolution of the Board of the National Bank of Ukraine dated 11.06.2018 № 64. Retrieved from: https://zakon.rada.gov.ua/ laws/show/v0064500-18#Text/
- Loboda, D. L. (2003). New methods of credit portfolio risk assessment. Bulletin of the Ukrainian Academy of Banking, 2.
- External threats: The main challenges for the banking sector in 2020. Retrieved from: https://minfin.com.ua/ua/ 2020/01/29/40586042/
- Kharchenko, A. M. (2014). Economic nature of credit risk as a key risk of bank lending. Scientific notes of the National University “Ostroh Academy”. Series “Economics”: a collection of scientific papers. Ostrog: Ostroh Academy National University Publishing House. Issue 26.
Received: 15 August 2020
How to quote this article?
|Sukach O. (2020). Risk Minimization as a Tool to Ensure the Bank’s Security. Modern Economics, 22(2020), 90-94. DOI: https://doi.org/10.31521/modecon.V22(2020)-14.|