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Bank lending of the real sector of economy

Author(s) Vlasyuk S.A., , , Uman National University of Horticulture
Bondarenko N.V., , , Uman National University of Horticulture
Category Economics
year 2018 issue Випуск №93. Частина 2
pages 32-41 index UDK 336.71
DOI 10.31395/2415-8240-2018-93-2-32-40 (Link)
Abstract Under the modern conditions of management, the main source of financial support for the activity of the real sector of economy is bank lending. The main guideline for reforming the banking system is the search for optimal sources for improving performance of banking institutions in relation to their effective lending to the real sector of economy. It is shown that the real sector, like the entire economy of the country, continues to be in extremely difficult conditions – military operations, destruction of a significant part of industrial objects, agricultural sector and transport and logistics infrastructure, as well as a drop in world prices for the leading positions of domestic exports. It is found that the main obstacle to the development of the banking system is the low level of competitiveness. Beginning with 2014, a number of measures were taken, allowed to improve the quality of provided services, the level of competitiveness, to develop an effective and flexible system for increasing the transparency of banking institutions. It is noted that despite a significant decrease in the total number of banks (since 2008 by 93 banks) and specific features in their operations, there has been a significant increase in the assets of the Ukrainian banking institutions. This indicates an increase in their competitiveness and stability. It should be specified that the positive dynamics of the Ukrainian economic development is directly related to the activation of the real sector, creation of a stable and transparent banking system which in turn leads to close interaction between banking and real sectors of economy. It is possible only on the basis of effective partnership relations between credit and financial institutions and business entities. It is revealed that the lack of business in bank lending is caused by a number of factors. The main ones are a low level of competitiveness and labor productivity; insecurity of rights of creditors and borrowers at the legislative level; increase in the amount of problem loans; lack of long-term funds in the banking system; high interest rates on loans; lack of motivation of banking institutions to lend to the real sector; lack of a government support mechanism for borrowers. It is established that further development of the real sector and its economic growth is impossible without comprehensive reforms and a systematic approach to solving a number of issues. They are directly related to the improvement of the monetary policy of the National Bank of Ukraine, tax legislation, clear formation of budgets at the state and local levels and restoration of trust between banks and business entities.
Key words bank lending, financial resources, real sector of economy, interest rate, credit.
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