Vira Druhova

The financial self-sufficiency of communities determines their ability to create additional jobs, attract investment resources, offer quality social services, and improve the population’s living standards and well-being. The study aims to identify the casual relationships between financial self-sufficiency and local economic development of Ukrainian territorial communities during economic instability. The paper used integrated assessment based on a spatial approach (identifying the level of local economic development), indicative method (calculating empirical values of financial self-sufficiency of communities), VEC model (analyzing the sensitivity of local economic development to changes in financial self-sufficiency), balanced multi-component regression method (modeling the relationship between local economic development and financial self-sufficiency). Data were gathered on all territorial communities of Ukraine in 2021. The results show that the highest level of local economic development was observed in Dnipropetrovsk oblast (empirical coefficient equal to 0.855), high levels in Kharkiv, Zaporizhzhia, Odesa, Kyiv, and Poltava oblasts (0.787; 0.687; 0.684; 0.663 each, respectively), and moderate levels in Zakarpattia (0.448) and Kirovohrad (0.433) oblasts. With increased financial self-sufficiency, local economic development can exceed 2%; a 1% increase in the decentralization of tax revenues and expenditures simultaneously leads to an increase in the attractiveness of the investment climate as an indicator of local economic development (2.3-6.6%). The study proves that the territorial communities of the regions characterized by a low level of local economic development demonstrated higher values of decentralization of interbudgetary revenues than those with higher values of local economic development.

The indicator-based method recommended by the Basel Committee is one of the most common approaches to identifying systemically important banks. National authorities often establish their own methodology by adding modern tools that, in their opinion, adequately capture systemic risk in their domestic economy.
The paper shows that the updated methodology for assessing systemically important Ukrainian banks can be verified on publicly available data. The analysis confirms that the updated version of the National Bank’s assessment methodology is in line with those recommended by international banking institutions, but does not fully capture the current systemic risk factors.
Systematization of literary and statistical sources indicates that one of the main sources of systemic risk in Ukraine is the establishment of a state monopoly in the banking market. Thus, the assessment methodology should be supplemented by instruments to evaluate the performance of the banking business. The indicator-based method and the minus one bank Z-score approach were tested to identify Ukrainian systemically important banks from 2010 to 2017.
The loss of the leading role of PrivatBank in ensuring banking stability after the transition to state ownership since 2016, as well as the equalization of the systemic risk contribution of banks with state, foreign and domestic capital, was discovered. The study empirically confirms that Z-index, which combines the positive characteristics of the static asset return ratio and bankruptcy probability, can be used to determine the methodology as an indicator of the performance of systemically important banks, primarily state-owned banks.