DIVERSIFICATION OF BANK RISKS WHEN LENDING TO AGRARIAN PRODUCTION
Journal Title: Інноваційна економіка - Year 2017, Vol 72, Issue 11
Abstract
Purpose – is to determine the essence of the concept of "diversification of Bank credit risks" as one of way of reducing their level and recovery, increase of efficiency of Bank crediting of agrarian production. Methodology of research. For the study used a variety of methods: systematic and structural – in the study of risk management of credit portfolio of the bank; economic and analytical – for a concrete and abstract assessment of processes while justifying of the method of reducing the degree of banking risks. Findings. It is substantiated that diversification is a method of risks control due to selection and asset allocation for various components which are little correlated among themselves both at the level of the financial instruments, so and on their parts. It is proven that diversification is the most reasonable and relatively less expensive way to reduce Bank risks. However, it cannot reduce risk to zero, because the activity of the Bank is influenced by factors of external order, not connected with some objects to attract capital, therefore, the diversification doesn’t influence on it. It is established that the use of this mechanism in banks is limited, so many banks instead of developing the product range of their services, concentrating on some of the most sought after products, getting in this way dependence on market conjuncture. Originality. A scientific approach to the use of the mechanism of diversification as one of way of neutralization risks of Bank lending is substantiated. Practical value. Scientific and practical recommendations for the use of mechanism of diversification for neutralization of banking risks in crediting to agricultural production have been developed.
Authors and Affiliations
Vitalii Voloshchuk
Keywords
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