V. Kromonov’s methodology for assessing the reliability of a commercial bank and the direction of its improvement

M. A. Gorskiy ()

Scientific notes of the Russian academy of entrepreneurship, vol. 18, issue 3

Abstract: The reliability of the financial and economic basis of a commercial bank, along with financial stability, is the most important indicator of its competitive functioning in a volatile market environment that initiates an increased risk of loss of profitability, a decrease in investment activity and asset quality. The regulator's special requirements for the bank's reliability are not least related to the rating of credit institutions for this indicator. The applied methods for assessing the reliability of commercial banks should be adequate to the modern conditions of credit and investment activities and take into account its features, including the amount of capital, financial market priorities, risk attitudes, scale and scope of activity, and other factors. From this position, the article discusses the practice of applying methods widely used by Russian banks to assess the financial reliability of commercial banks, proposed by the Bank of Russia, and the authors team led by V.S. Kromonov. On the basis of model calculations, they demonstrate the shortcomings and imperfections of these methods and suggest ways to improve them, including in terms of clarifying the composition of the primary reliability indicators, choosing their weights in the integral indicator and applying alternative reliability assessment options based on aggregated bank performance indicators.

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