Analysis of banking system’s credit risks of Ukraine
Journal Title: Економіка. Фінанси. Право - Year 2019, Vol 2, Issue
Abstract
Introduction. An analysis of banks' credit risks is a topical issue that affects the success and effectiveness of their activities. Purpose. The article is devoted to determination of essence and analysis of credit risk of banks of Ukraine. Results. Credit risk is defined as the amount of expected loss (loss) on the asset as a result of default of the debtor / counterparty. Credit risks can be classified according to different criteria, the main ones include: level of occurrence, financial consequences, origin, probability of realization, borrower status, possibility of forecasting, type of credit operation, risk taking and term of the loan agreement. The factors causing credit risks include external and internal factors related to the environment of the banks. In Ukraine, the risk management of the bank's loan portfolio is carried out at two levels. At the first level, it is regulated by the National Bank of Ukraine through the use of common methods. At the second level, the main branches of banks are regulated through the formation of a credit policy, the establishment of types of loans, the range of clients, the level of interest rates. In the article, taking into account the development of the banking system of Ukraine, the analysis of indices of credit risk of domestic banks and their changes was conducted. During the years 2015-2017, the assets of Ukrainian banks remained at a stable level and somewhat varied, but the share of provisions for reimbursement of possible expenses for active banking operations increased annually. The rapid increase in the share of bad debts in the bank's loan portfolio leads to significant deductions in provisions for covering losses on credit operations. The reasons for internal or related activities of the bank itself include: incomplete or inaccurate information about the borrower; poor assessment of the borrower's creditworthiness; insufficient level of control over the borrower after the loan; a large segment of related loans. Conclusion. The level of credit risk of Ukrainian banks is very high and negatively affects the whole banking system of the country. The further activities of domestic banks should be based on a well thought-out strategy that will reduce the risk of lending.
Authors and Affiliations
Olena Mykhailivna Sheptukha
Keywords
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