Assessment of the banking system financial stability based on the differential approach
In this paper, the banking system financial stability is assessed based on the differential approach. The differential approach provides for taking into account the specificity of the banking system structural organization (from the standpoint of the central bank and the second-level banks) and the...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2018-10-01
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| Series: | Banks and Bank Systems |
| Subjects: | |
| Online Access: | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/10964/BBS_2018_03_Kuznyetsova.pdf |
| _version_ | 1819090452318519296 |
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| author | Anzhela Kuznyetsova Nataliya Pogorelenko |
| author_facet | Anzhela Kuznyetsova Nataliya Pogorelenko |
| author_sort | Anzhela Kuznyetsova |
| collection | DOAJ |
| description | In this paper, the banking system financial stability is assessed based on the differential approach. The differential approach provides for taking into account the specificity of the banking system structural organization (from the standpoint of the central bank and the second-level banks) and the sets of financial stability indicators, different in terms of their structure, and their volatility measures, according to this approach.The banking system financial stability is assessed based on the two groups of indicators: the first one characterizes the central bank financial stability (indicators of gross international reserves, effectiveness of monetary policy and foreign exchange regulation, ability to create favorable conditions in order to ensure the effectiveness of the banking sector); the second one defines the financial stability level for state banks, banks with private and foreign capital (indicators of the capital adequacy, liquidity, structure of assets and liabilities, effectiveness of the activity, financial risks). The differences between the sets of financial stability indicators for different groups of banks and the expediency of taking them into account during the assessment are revealed and substantiated according to the results of using the principal components method.The developed procedure of assessing the banking system financial stability provides for: constructing the banking system financial stability index (by multiplicative convolution of central bank financial stability subindex and three banks’ financial stability subindices); defining its high, medium and low level according to its quantitative values (according to interval scales, developed according to the rule “3σ”; interpreting the assessment results based on the scenario analysis, which is based on taking into account the dynamic change of the financial stability index during the analyzed period and allows to identify the state of the banking system (stable, conventionally stable or critical). |
| first_indexed | 2024-12-21T22:24:03Z |
| format | Article |
| id | doaj.art-9842f6e2cef14811b4d2c1657ea6ca12 |
| institution | Directory Open Access Journal |
| issn | 1816-7403 1991-7074 |
| language | English |
| last_indexed | 2024-12-21T22:24:03Z |
| publishDate | 2018-10-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Banks and Bank Systems |
| spelling | doaj.art-9842f6e2cef14811b4d2c1657ea6ca122022-12-21T18:48:16ZengLLC "CPC "Business Perspectives"Banks and Bank Systems1816-74031991-70742018-10-0113312013310.21511/bbs.13(3).2018.1210964Assessment of the banking system financial stability based on the differential approachAnzhela Kuznyetsova0Nataliya Pogorelenko1Doctor of Science in Economics, Professor, Rector of SHEI “Banking University”PhD in Economics, Associate Professor, Kharkiv Educational and Scientific Institute of SHEI “Banking University”In this paper, the banking system financial stability is assessed based on the differential approach. The differential approach provides for taking into account the specificity of the banking system structural organization (from the standpoint of the central bank and the second-level banks) and the sets of financial stability indicators, different in terms of their structure, and their volatility measures, according to this approach.The banking system financial stability is assessed based on the two groups of indicators: the first one characterizes the central bank financial stability (indicators of gross international reserves, effectiveness of monetary policy and foreign exchange regulation, ability to create favorable conditions in order to ensure the effectiveness of the banking sector); the second one defines the financial stability level for state banks, banks with private and foreign capital (indicators of the capital adequacy, liquidity, structure of assets and liabilities, effectiveness of the activity, financial risks). The differences between the sets of financial stability indicators for different groups of banks and the expediency of taking them into account during the assessment are revealed and substantiated according to the results of using the principal components method.The developed procedure of assessing the banking system financial stability provides for: constructing the banking system financial stability index (by multiplicative convolution of central bank financial stability subindex and three banks’ financial stability subindices); defining its high, medium and low level according to its quantitative values (according to interval scales, developed according to the rule “3σ”; interpreting the assessment results based on the scenario analysis, which is based on taking into account the dynamic change of the financial stability index during the analyzed period and allows to identify the state of the banking system (stable, conventionally stable or critical).https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/10964/BBS_2018_03_Kuznyetsova.pdfbanking sectorbanking systemcentral bankdifferential approachfinancial stabilityvolatility |
| spellingShingle | Anzhela Kuznyetsova Nataliya Pogorelenko Assessment of the banking system financial stability based on the differential approach Banks and Bank Systems banking sector banking system central bank differential approach financial stability volatility |
| title | Assessment of the banking system financial stability based on the differential approach |
| title_full | Assessment of the banking system financial stability based on the differential approach |
| title_fullStr | Assessment of the banking system financial stability based on the differential approach |
| title_full_unstemmed | Assessment of the banking system financial stability based on the differential approach |
| title_short | Assessment of the banking system financial stability based on the differential approach |
| title_sort | assessment of the banking system financial stability based on the differential approach |
| topic | banking sector banking system central bank differential approach financial stability volatility |
| url | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/10964/BBS_2018_03_Kuznyetsova.pdf |
| work_keys_str_mv | AT anzhelakuznyetsova assessmentofthebankingsystemfinancialstabilitybasedonthedifferentialapproach AT nataliyapogorelenko assessmentofthebankingsystemfinancialstabilitybasedonthedifferentialapproach |