Doctor of Economics, Professor of Kyiv National Economic University named after Vadym Hetman
Postgraduate Student of the Banking Department of Kyiv National University of Trade and Economics
FINANCIAL STABILITY OF BANKS IN HIGH MARKET VOLATILITY
Background.The number of liquidation processes shows that there is the absence of effective mechanisms that control the state of the bank both by regulatory authority of the market as well as by bank management. One of the most significant reasons for banks liquidation is a considerable market volatility. Consequently, there arises the immediate necessity to implement the mechanism analysis that would take into consideration high market volatility.
Analysis of recent research and publications.Research analysis shows that in the scientific literature some aspects of the investigated problem still remain unsolved. In particular, such problems as interconnection of high market volatility with the change of indicator value of bank financial stability were not thoroughly investigated.
The aim. Carry out thorough investigation of the criteria and their change concerning financial bank volatility. Make some suggestions as to how to use the defining mechanism of financial stability when the market is volatile.
Materials and methods. There were used the following methods of investigation: monographical, synthesis, comparison.
Ukrainian banks have recently been experiencing problems with their financial conditions. In most cases, one of the main reasons for this is market volatility, which directly influences bank financial stability.
There is an urgent need for working out the mechanism, which will help define bank financial stability when the market is volatile.
This mechanism must not consider traditional analysis models of bank financial stability any more. As they are based on the established performance benchmarks of bank activity.
We offer to implement such term as “variable regulatory value”.
The calculation principle of this term is as follows: based on the result of every index it is possible to identify the row of equal value range of the index. Value ranges are divided into equal parts, which gives a possibility to identify value ranges that have a critical risk level. Value ranges can also be divided into those that have the admissible risk level.
The article shows the necessity of implementation of this mechanism and it contains the results of author’s personal developments.
Conclusion. The provided developments of the mechanism of financial stability of the bank under volatile conditions give the possibility to control the banks state considering the dynamics and trend of market changes. In its turn, it results in the possibility to implement more effective system as to control the banks, and it helps bank management make more effective decisions so as not to lose financial stability.
Keywords:financial stability, bank performance analysis, effective management, financial market, bank activity indicator.
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