Peculiarities of ensuring financial sustainability of the Ukrainian banking system

Abstract

Ensuring and strengthening the financial sustainability of banks is a difficult and not completely resolved task. It is inherent not only to developed countries, it has also become nationally important in Ukraine, which was largely predetermined by the specifics of the domestic banks development. This is explained, in particular, by the banking institutions’ focus mainly on the relatively short-term activity, the need to work under high risk, resulting from economic and political instability in the country. Therefore, nowadays, it is urgent for each Ukrainian bank to focus on the main strategic objective – effective management and ensuring financial sustainability. The purpose of this study is to assess the current state and identify the features of ensuring financial sustainability of the banking system of Ukraine. It was pointed out in the study that the negative tendency to increase the number of insolvent commercial banks during 2012–2017 indicates problems with providing financial sustainability to commercial banks. The tendencies have been revealed that testify to the problems of the banking system capitalization in Ukraine, which greatly affects its financial stability. Given the analysis of indicators of banks financial sustainability that characterize the bank capital adequacy, the conclusion is made on ambiguous assessment of sufficient level of capitalization, since despite the correspondence of most values of coefficients to the indicators, there is a lack of capitalization of the domestic banking system and equity capital concentration. In general, the results made it possible to identify trends in the development of capital ratios and financial sustainability indicators and to shape appropriate measures to increase the level of capitalization in order to ensure the financial sustainability of the banking system.