Selecting a kind of financial innovation according to the level of a bank’s financial soundness and its life cycle stage
This paper presents the recommendations for selecting a kind of financial innovation in a bank based on the results of theoretical research regarding its usage as a tool for ensuring bank financial soundness. The study is aimed at developing an approach to selecting a kind of financial innovation de...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2016-12-01
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| Series: | Banks and Bank Systems |
| Online Access: | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/7993/BBS_en_2016_04_Kolodiziev.pdf |
| _version_ | 1828852779425202176 |
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| author | Oleh Kolodiziev Iryna Chmutova Viktoriia Biliaieva |
| author_facet | Oleh Kolodiziev Iryna Chmutova Viktoriia Biliaieva |
| author_sort | Oleh Kolodiziev |
| collection | DOAJ |
| description | This paper presents the recommendations for selecting a kind of financial innovation in a bank based on the results of theoretical research regarding its usage as a tool for ensuring bank financial soundness. The study is aimed at developing an approach to selecting a kind of financial innovation depending on the level of bank financial soundness and the stage of bank life cycle. The existing method of identifying a bank’s life cycle stage in the framework of the developed approach was improved: it was offered to use the criteria of the growth rates of a bank’s market share, total income, staff costs and net cash flow for grouping banks by the stage of their life cycle and conduct two-steps clustering which helps to determine those banks which are on the transitional stages and to refer a bank to a similar group (growth, stabilization and decline). The empirical results of its implementation suggest that there are three groups of Ukrainian banks that vary according to the stage of bank life cycle (growth, stabilization, decline), excepting those institutions which are on the transitional stages. By the example of banks which represent the main characteristics of each cluster, the authors recommend to launch particular kinds of financial innovation in bank operating activity, taking into account the peculiarities of each group. The empirical results confirm the relevance of the developed approach and its value for identifying the current phase of a bank’s development and managing its financial soundness.
Keywords: bank financial soundness, bank life cycle stage, cluster analysis, discriminant analysis, Ukraine. JEL Classification: G21, D91 |
| first_indexed | 2024-12-13T00:00:26Z |
| format | Article |
| id | doaj.art-98caeabf889042198bf06772f426d012 |
| institution | Directory Open Access Journal |
| issn | 1816-7403 1991-7074 |
| language | English |
| last_indexed | 2024-12-13T00:00:26Z |
| publishDate | 2016-12-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Banks and Bank Systems |
| spelling | doaj.art-98caeabf889042198bf06772f426d0122022-12-22T00:06:26ZengLLC "CPC "Business Perspectives"Banks and Bank Systems1816-74031991-70742016-12-01114404910.21511/bbs.11(4).2016.047993Selecting a kind of financial innovation according to the level of a bank’s financial soundness and its life cycle stageOleh Kolodiziev0Iryna Chmutova1Viktoriia Biliaieva2D.Sc. (Economics), Professor, Head of Banking Department, Simon Kuznets Kharkiv National University of EconomicsDr. of Economics, Professor, Department of Banking, Simon Kuznets Kharkiv National University of EconomicsPostgraduate student, Department of Banking, Simon Kuznets Kharkiv National University of Economics (Ukraine)This paper presents the recommendations for selecting a kind of financial innovation in a bank based on the results of theoretical research regarding its usage as a tool for ensuring bank financial soundness. The study is aimed at developing an approach to selecting a kind of financial innovation depending on the level of bank financial soundness and the stage of bank life cycle. The existing method of identifying a bank’s life cycle stage in the framework of the developed approach was improved: it was offered to use the criteria of the growth rates of a bank’s market share, total income, staff costs and net cash flow for grouping banks by the stage of their life cycle and conduct two-steps clustering which helps to determine those banks which are on the transitional stages and to refer a bank to a similar group (growth, stabilization and decline). The empirical results of its implementation suggest that there are three groups of Ukrainian banks that vary according to the stage of bank life cycle (growth, stabilization, decline), excepting those institutions which are on the transitional stages. By the example of banks which represent the main characteristics of each cluster, the authors recommend to launch particular kinds of financial innovation in bank operating activity, taking into account the peculiarities of each group. The empirical results confirm the relevance of the developed approach and its value for identifying the current phase of a bank’s development and managing its financial soundness. Keywords: bank financial soundness, bank life cycle stage, cluster analysis, discriminant analysis, Ukraine. JEL Classification: G21, D91https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/7993/BBS_en_2016_04_Kolodiziev.pdf |
| spellingShingle | Oleh Kolodiziev Iryna Chmutova Viktoriia Biliaieva Selecting a kind of financial innovation according to the level of a bank’s financial soundness and its life cycle stage Banks and Bank Systems |
| title | Selecting a kind of financial innovation according to the level of a bank’s financial soundness and its life cycle stage |
| title_full | Selecting a kind of financial innovation according to the level of a bank’s financial soundness and its life cycle stage |
| title_fullStr | Selecting a kind of financial innovation according to the level of a bank’s financial soundness and its life cycle stage |
| title_full_unstemmed | Selecting a kind of financial innovation according to the level of a bank’s financial soundness and its life cycle stage |
| title_short | Selecting a kind of financial innovation according to the level of a bank’s financial soundness and its life cycle stage |
| title_sort | selecting a kind of financial innovation according to the level of a bank s financial soundness and its life cycle stage |
| url | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/7993/BBS_en_2016_04_Kolodiziev.pdf |
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