Uman NUH | today: 09/10/2019

Bank lending as an important factor of economic stabilization of the country

Author(s) Nepochatenko Olena O., Doctor of Economics, Professor, Rector of Uman National University of Horticulture, Head of Department, Uman National University of Horticulture
Bondarenko N.V., , , Uman National University of Horticulture
Vlasyuk S.A., , , Uman National University of Horticulture
Category Economics
year 2017 issue Випуск №90. Частина 2
pages 7-16 index UDK 336.71
Abstract Banking practice in Ukraine is conducted under unstable conditions that depend on the following factors, which interaction is not predictable and impossible to forecast: increasing the proportion of bad debts in credit portfolio structure, exceptional and significant depreciation of the national currency, growth of distrust of the banks, increased credit resources, low level of risk management of most banks etc. The aim of this study is to find ways for effective functioning of banking institutions, especially in the field of bank lending improvement. The main premises of the financial system and achievements of domestic and foreign scientists were the theoretical and methodological framework in the course of investigation. This study was conducted using the following methods: comparative, statistical, economic, graphic and abstract-logical ones. It was found that according to the number of institutions, the amount of financial resources and the volume of active and passive operations of all the financial and credit systems, leading place belongs to commercial banks. In order to ensure their effective work, the exchange rate stability, weakening of currency restrictions, predictable political situation, long-term financial strategy and its successful implementation are necessary. It was determined that nowadays the bank institutions actively give preference of increase in lending to the agricultural sector. As of October 10, 2016 the growth of loans in the agricultural sector in general was 1 6%. It was found out that deregulation of total assets of the banking system as a whole were the rate fluctuations of hryvnia, the output of non-profitable commercial banks, deposit outflow, reduction of loan portfolios, and poor regeneration of the financial system in general. It was discovered, that the loan portfolio of commercial banks mostly consists of hryvnia loans for short and medium term. It was analyzed that the average rate on credits in the national currency is 21,1% as of April 01, 2016, on credits in foreign currency the average rate is 8,5 %. Fluctuations in interest rates are caused by the high cost of deposits attracted to the banks. As a comparison, on April 01, 2016 the interest rate on long-term deposits in local currency (hryvnia) was 19,9 %, in foreign currency – 8,0 % and 14,2 % in local currency and 4,5 % in foreign currency on short-term deposits. It was found that the share of loans issued in foreign currency in the loan portfolio of bank institutions is quite high and as of April 01, 2016 it was 59 % and as of January 01, 2016 – 57 %. This is because the significant part of loans in foreign currency were issued to individuals in the years 2008-2009 for the purchase and construction of real estate. It was determined that the actual amount of delinquent loans is too high, in spite of the fact that the banks are trying to pay off debt on loans. The restructuring of assets has a negative impact on the level of bank capitalization, which requires additional financial support from their owners. In order to restore the efficiency of the banking system it was offered to reduce the foreign exchange restrictions; to carry out the additional capitalization of commercial banks; to reduce the interest rates for bank loans; to restore confidence in the banking sector of the country; to provide clear information about the liquidation of banks; to do the state influence on inflation; to conduct the state policy on forecasting the price of credit.
Key words bank loan, the banking system, credit risk, credit portfolio, interest rates, the borrower.
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