Financial security of banks: realities and prospects of security

Viktoria Kovalenko

E-Forum Working Papers, 2022, vol. 12, issue 2, 141-151

Abstract: The article is devoted to the problems of ensuring the financial security of Ukrainian banks. In the face of military aggression, domestic banks have lost much of their customer base, banking operations are aimed more at servicing cash flows. Banks are forced to apply the extension of credit debt repayment, sources of own resources have been significantly reduced. Such a channel of replenishment of banks' resources as household savings is completely absent due to rising unemployment, declining incomes, the emergence of additional costs for medical needs and self-defense. In these conditions, the topic of ensuring the financial security of banking becomes extremely relevant. The article identifies the main weaknesses and strengths of the global foreign exchange market. Based on the analysis, it is established that the international foreign exchange market in its current form reflects the real demand and supply for different currencies. Sharp fluctuations in it during the crisis reflect the usual behavior of its participants, who invest in the currency - asylum, and real supply and demand, caused by the fact that investors withdraw from transactions using borrowed funds. Thus, the foreign exchange market is actually functioning normally. The most important legal documents defining the latest determinants for the formation of financial security strategy of banks are considered, namely: Economic Security Strategy of Ukraine until 2025, State Security Strategy, Financial Sector Development Strategy of Ukraine until 2025, Fintech Development Strategy in Ukraine until 2025. The article identifies threats that affect the level of financial security of the banking system. They are classified into factors that cause structural imbalances in the economy and those that affect the level of financial security of the banking system. It has been proven that today, military aggression is an extraordinary threat, which puts the threat of money laundering and terrorist financing in the first place. Based on the methodology of the Ministry of Economic Development and Trade of Ukraine, the level of financial security was determined by calculating the integrated indicator. The calculation of individual indicators included in the integral and their dynamics indicate an insufficient level of ability of the banking system of Ukraine during 2016-2021 to withstand the negative impact of external and internal factors. Thresholds of financial security indicators of banks indicate negative phenomena, such as: the bank's loss of signs of systemicity, resilience, dynamic development, competitiveness in foreign and domestic markets, which can lead to recognition of problems and insolvency. Summing up the article, it can be argued that it is necessary to develop and implement a set of measures aimed at improving the overall level of financial security of the banking system based on the formation of the latest Comprehensive Program for Financial Security of Ukrainian Banks

Keywords: banking system; banks; financial security indicator; threats; financial stability; financial security (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:cuc:eforum:v:12:y:2022:i:2:p:141-151

DOI: 10.36910/6775-2308-8559-2022-2-18

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