APPROACHES TO PRUDENTIAL REGULATION OF THE BANKING SECTOR TAKING INTO ACCOUNT THE CLUSTER DISTRIBUTION ACCORDING TO BUSINESS MODELS OF BANKS
Article Sidebar
Section
This work is licensed under a Creative Commons Attribution 4.0 International License.
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution 4.0 International (CC BY 4.0) license, which permits unrestricted use, distribution, and reproduction of the content in any medium, providing that the original author and source are credited.
Main Article Content
Abstract
The analysis of the bank’s business model is an important tool for regulators and controlling bodies to detect excessive accumulation of risk on the system level over the certain period of time. Prior to the crisis, supervisory authorities concentrated on whether institutions met the level of minimum regulatory requirements and focused on external vulnerabilities, such as macroeconomic issues and financial market risks. The crisis has revealed that certain characteristic of business models has been one of the main causes of the shock, the
weaknesses of the business model have become key factors in the loss of stability of banks. The traditional approach to prudential supervision is currently insufficient and requires changes that will allow supervisory authorities to assess the viability and sustainability of the business model at an early stage and identify key vulnerabilities that could ultimately lead to the failure of bank stability. The article considers the approaches to determining the business model of the bank. There is no single and objective approach to the classification of business models. Agreeing on such a classification would be the first step towards creating a proportionate approach. The article focused the influence of the business model of the bank on the key indicators of its activity is investigated; in particular on capitalization, liquidity management, profitability and credit and investment risks. The necessity of introduction of changes to the prudential supervision of the regulator on the basis of the proportional principle on the selected clusters is proved. The study concluded that each group of business models is exposed to approximately similar risks. When introducing prudential requirements, taking into account the specific characteristics of the cluster, such risks can be detected and minimized at an early stage of regulation. The principle should provide additional means to diagnose and prevent the consequences of reducing the financial stability of the bank.
Article Details
How to Cite
References
Zott, C., & Amit, R. (2010). Business Model Design: An Activity System Perspective. Long Range Planning, 43(2—3), 216—226.
Afuah, A. (2004). Business models: a strategic management approach. New York. Retrieved from https://lib.ugent.be/en/catalog/rug01:001301402.
Chesbrough, H., Rosenbloom, R. S., & Brown, J. S. (2002). The Role of the Business Model in Capturing Value from Innovation: Evidence from Xerox Corporation’s Technology Spinoff Companies. Industrial and Corporate Change, 11 (3), 529—555.
Zarutska, О. P. (2011). Strukturno-funktsionalnyi pidkhid do analizu finansovoi stiikosti banku [Structural and functional approach to the analysis of financial stability of the bank]. Visnyk Natsionalnoho banku Ukrainy — Bulletin of the National Bank of Ukraine, 4, 34—37 [in Ukrainian].
Panasenko, G. O., & Bortnikov, G. P. (2016). Model biznesu ukrainskykh bankiv v zalucheni koshtiv kliientiv [Model of business of Ukrainian banks in the attracted funds of clients]. Ekonomiko-matematychne modeliuvannia sotsialno-ekonomichnykh system — Economic and mathematical modeling of socio-economic systems, 21, 228—254 [in Ukrainian].
Rashkovan, V., & Podikin, D. (2016). Klasternyi analiz biznes-modelei ukrainskykh bankiv:zastosuvannia neironnykh merezh [Cluster analysis of business models of Ukrainian banks: application of neural networks]. Visnyk Natsionalnoho banku Ukrainy — Bulletin of the National Bank of Ukraine, 238, 13—40 [in Ukrainian].
Prymostka, L., Krasnova, I., & Brychka, S. (2017). Klasterizatsiia ukrainskykh bankiv v koordynatakh «biznes-model — finansova stiikist» [Clustering of Ukrainian banks in the coordinates «business model — financial stability»]. Sciences of Europe, 21, 44—54 [in Ukrainian].
Pantieleieieva, N. (2013). Innovatsiini biznes-modeli bankiv yak vidpovid na vyklyky ta naslidky finansovoi kryzy [Innovative business models of banks in response to the challenges and consequences of the financial crisis]. Finansovyi prostir — Financial space, 3 (11), 70—76 [in Ukrainian].
Kirisov, S. (2009). Teoriya i praktika primeneniya processnogo pіdhoda k rukovodstvu kachestvom deyatel’nosti organizacії [Theory and practice of application of the process approach to quality management of the organization]. Tambov [in Russian].
Liubich, O., Bortnikov, G., & Panasenko, H. (2016). Analiz biznes-modeli derzhavnykh bankiv v Ukraini [Analysis of the business model of state-owned banks in Ukraine]. Finansy Ukrainy — Finance of Ukraine, 10, 7—14 [in Ukrainian].
Derkachenko, A., & Khudolii, U. (2018). Analiz biznes-modelei bankiv Ukrainy [Analysis of business models of Ukrainian banks]. Oblik i finansy — Accounting and Finance, 2, 76—83 [in Ukrainian].
Bartosh, O. (2018). Orhanizatsiia obliku finansovykh instrumentiv za MSFZ 9 «Finansovi instrumenty» [Organization of accounting for financial instruments under IFRS 9 «Financial Instruments»]. Tezy dopovidei XII Mizhnarodnoi naukovo-praktychnoi konferentsii «Rozvytok bankivskykh system svitu v umovakh hlobalizatsii finansovykh rynkiv» (m. Cherkasy, 9 lystopada 2018 roku) — Abstracts of the XII International Scientific and Practical Conference «Development of banking systems in the globalization of financial markets» (Cherkasy, November 9, 2018). Cherkasy [in Ukrainian].
Vovchak, O., Rudevska, V., Khlan, Ya., & Reverchuk, S. (2019). Bank business model and level of non-performing loans: feature and interaction forms (problems) in Ukraine. Journal of Eastern European and Central Asian Research (JEECAR),Vol. 2.
Kichurchak, M. (2019). Bank deposit activity in Ukraine: Directions and factors of development activation. Journal Eastern European Central Asian Research, Vol. 6, 1, 145—160.
Business Models of Scandinavian Banks Subsidiaries in the Baltics: Identification And Analysis by Aldona Jočienė (2015). Occasional Paper Series, 5.
Natsionalnyi bank Ukrainy. (2001). Postanova vid 28.08.2001 No 368 «Pro zatverdzhennia Instruktsii pro poriadok rehuliuvannia diialnosti bankiv v Ukraini» (zi zminamy ta dopovnenniamy) [Resolution of 28.08.2001 No 368 «On approval of the Instruction on the procedure for regulating the activities of banks in Ukraine» (as amended)]. Retrieved from https://zakon.rada.gov.ua/laws/show/z0841-01 [in Ukrainian].
Natsionalnyi bank Ukrainy. (n. d.). Ofitsiinyi sait [Official site]. bank.gov.ua/en/statistic. Retrieved from https://bank.gov.ua/en/statistic [in Ukrainian].