Svitlana Yehorycheva

Capital stability of the banking system is the basis of its effective development and realization of its main function – optimal redistribution of capital. So, the aim of the article is to develop indicators of capital stability of the banking system, and to propose the frameworks for the long term capital stability strategy of the banking system in Ukraine. For this purpose, the analysis of micro- and macroeconomic indicators of the capital stability of domestic banks within the period 2007–2016 is made. To carry out the research, there were used the statistic data of the National Bank of Ukraine, its legislative and regulatory documents, the Basel Accords.

Capital stability of the banking system has been defined in the article as the process of ensuring capitalization that is adequate to the banking risks and cyclical economic development. It has been detected that a significant reduction in return on equity of the Ukrainian banks in 2014–2015 even with restoring their liquidity has had a crucial destabilizing impact on their capital stability. In order to improve the assessment of capital stability, its key indicators for the groups of domestic banks have been studied. The necessity of refocusing macroprudential requirements of the National Bank of Ukraine from quantitative indicators to qualitative ones to ensure economic development has been proved. It has been concluded that a necessary condition for restoring the Ukrainian banking system was to develop an effective strategy for ensuring its capital stability, which should be focused on the creation of its diversified structure.

The financial equilibrium (“financial health”) of the enterprises is a prerequisite for their sustainable development, which ensures macroeconomic stability of the economy and the welfare of the state. It should be supported by the banking system, which performs the function of the effective reallocation of capital. Recently, the Ukrainian banking system itself is in a challenging situation and is undergoing a period of transformation. The purpose of the study is to assess how sufficiently the banking system of Ukraine supports the financial equilibrium of enterprises and to find the possibilities to strengthen its role in the progress of the real sector of economy. The authors single out three stages of financial equilibrium growth; each of them can be supported by the relevant banking services. The empirical analysis proves that the Ukrainian banks successfully ensure only the first stage, namely, liquidity balancing. To quantitatively assess the role of the banking system in supporting the enterprises’ financial equilibrium, a multivariate regression applying mathematical gnostic analysis in the program shell R Console is used. The research makes it possible to find out that only the economy monetization, the share of time deposits of economic entities and growth rate of mortgage loans have a positive effect. The authors conclude that the problems of both enterprises and the banking system are in the sphere of development and implementation of government economic policy and are aggravated by the restrictive monetary policy.

Modern insurance business, including in developing countries, is associated with the introduction of innovations. The purpose of this paper is to clarify the features of the insurance market’s innovation in Ukraine by reviewing the literature and analytical data on the market as a whole and its individual participants. The results show that innovations implemented in the insurance market can be classified according to certain characteristics, which provides opportunities for its empirical study. The analysis reveals that the peculiarities of the innovative development of the Ukrainian insurance market are determined by many factors, among which digitalization and increased risks due to the COVID-19 pandemic are the main ones today. Based on the analysis of leading insurance companies’ practice, it is concluded that they implement only a limited amount of innovations, mainly of incremental and combinatorial types, and do not actively use modern communication channels with consumers. The results highlight the need for insurance and FinTech companies to cooperate in the innovation ecosystem, which is still being formed in the Ukrainian insurance market. The study also considers the possibility of using a system of indicators to assess the innovativeness of insurance companies.

The paper is devoted to an under-researched topic of the international business community’s reaction to russia’s armed aggression against Ukraine. It aims to evaluate how G7 and EU financial sanctions, institutional pressure, ESG ratings, and asset value of multinational banks in russia influence their decisions to reduce activities in the invading country. The study used the Yale CELI database of companies leaving and staying in Russia for the classification tree method. The results show that none of the banks headquartered in G7 and EU member states that had no or relatively little assets in russia before the invasion are doing business there on a pre-war scale. Unlike banks headquartered in other countries, most either curtailed their presence in that market or exited the market. This indicates that financial sanctions imposed by G7 and EU member states and institutional pressure on banks in these countries to withdraw from the russian market have proven effective to a certain extent. However, these factors do not meaningfully influence the business of multinational banks with significant assets in russia. The study has not confirmed the hypothesis that a bank with higher ESG ratings is more likely to curtail its operations in the market of an aggressor country and withdraw. However, nearly all banks that scaled back significant activities or even pulled out of russia have better ESG indicators than the industry average. The results suggest the feasibility of improving the methodologies of ESG rating providers for accurately measuring business reactions to aggression and war crimes.