Banking system of the country: Elements, functions and potential in ensuring economic growth

Abstract

The banking system plays an important role in the development and functioning of the country's economy. The purpose of the study was to investigate and summarise the content of the banking system,considering its elements, functions, and potential for economic growth. During the research the following methods were used: theoretical generalisation, system approach, abstract-logical, and logical-analytical. The study examines the statements of scientists on the definition of the banking system from the standpoint of its legal basis and content. The composition of the elements of the banking system is considered in view of the objectively existing integration processes. It was emphasised that it is appropriate to consider the aspect of globalisation when generalising the essential, as well as the criterial features of the banking system. A study on the institutional and institutional-economic approaches to the functioning and development of the banking system. It was determined that the banking system is a sphere of procurement of a number of financial services and through its functioning and development effective levers of regulation are acquired.The study noted the features of the banking system must include the parameters of liquidity and financial stability, sufficient capitalisation, profitability, protection from internal and external risks and threats, financial and economic security, adaptability to the global, and macroeconomic environment. It is advisable to consider such structural features as the ratio of internal and external banking capital, the ability to develop in accordance with modern requirements in terms of information technology progress, information society, and digitalisation of business communications in generalising the essential features of the banking system. Further clarification of the criteria of the banking system will make provision for their identification at the level of each of its elements. The functions of the banking system were identified and generalised. The composition of the applied approaches to the essence of the banking system were expanded and supplemented with structural, security, and strategic ones. The integration of existing and new views on the concept, structure, functions, and role of the banking system in the economy allowed to develop an original position on the content of the concept of the banking system. Structural changes in the country's economy have a significant impact on the functioning of the banking system. This, in turn, requires the identification of priority areas for structural reform of both the economy as a whole and the banking system, which, in fact, will be the subject of further research.