Issue #2 (Volume 13 2018)

Due implementation of debtors’ financial solvency assessment models by Ukrainian banks with the aim of calculating the probability of their default (PD) is the next step towards the integration of Ukrainian banking system into global banking community, convergence of methodical approaches to assessing the credit risk with standards of international practice, possibility of using IRB-approach (an approach based on internal ratings) for calculating the regulatory requirements to capital adequacy.
The analysis of approaches to bank credit portfolio segmentation according to types of debtors and debtors’ financial solvency assessment models, depending on the performed segmentation and accumulated bank statistical data, from the point of view of its suitability for Ukrainian banks, will enable the banks to choose the most suitable ones for implementation taking into account nature and complexity of operations performed.
Such approaches will be more adapted to minimum capital requirements, simultaneously agreeing with national supervisory priorities.

The purpose of this study was to identify sources of recruiting as practiced by the foreign commercial banks operating in Jordan and their impact on job performance proficiency. Six foreign banks were chosen randomly, 160 questionnaires were distributed to employees from the human resource departments at these banks, 121 valid questionnaires were recovered – 76% – and statistically analyzed. Results revealed the highest level of using internal recruitment sources related to accelerating promotion. External recruitment sources related to online ads and attracting distinctive graduates. There is an impact of overall internal recruitment sources on job performance proficiency. There is no impact of the overall external recruitment sources on job performance proficiency, except external recruitment sources related to recommended employees, educational institutions, and training centers, which have impact on job performance proficiency.
The study recommended to maintain the application of promotion strategies by acceleration as a source of internal employment, because they positively influence the increase in the level of performance among the employees. Maintain the follow-up of graduates at universities to attract the first of them as a source of employment, maintain contact with the training centers and select the distinguished trainees as the sources of employment, and diversify advertising methods to attract talent.

There are two sectors of banks operating in Indonesia, namely Sharia banks and conventional banks. Improving performance is important in maintaining public confidence in the bank. Efficiency is one of the parameters to measure the performance of Sharia banks. This study measures the comparative level of technical efficiency of Sharia commercial banks and conventional banks by Stochastic Frontier Analysis method during 2011–2015 period by using 10 samples of Sharia commercial banks and conventional banks. Input variables in this study are total deposits, operational costs, and other operational costs. Total financing is an output variable. The results of this study show that total deposits and operational costs have a positive and significant impact on total financing in Sharia and conventional banks. The average score of the technical efficiency of Sharia commercial banks during the period observed is 0.84 and conventional banks is 0.85.

Sustainable growth and development can be the most important lesson that banks have learned in recent decades. Banks would gain many benefits, win the competition and develop sustainably if there have been more and more loyal customers. Customer satisfaction will help build customer loyalty. In order to have loyal customers, service quality must be good. Quality customer service of the bank is to ensure customer satisfaction and take their needs into consideration to improve service quality. High customer service quality will generate value not only to meet customer needs but also the expectations of customers and make banks more prominent than their competitors. This study identifies factors that affect customer satisfaction with the service quality at Vietnamese retail banks. The results are obtained by qualitative and quantitative method. The research model with a questionnaire consisting of 22 variables, 5 scales for a survey of 554 customers, is identified and developed through interviews with experts and group discussions. The findings show that customer satisfaction with the service quality at retail banks is influenced by “reliability”, “responsiveness”, “empathy”, “security”, and “tangibles”. Based on the findings, solutions for improving service quality are proposed for Vietnamese retail banks.

Working capital management is germane for the success of the banking industry in Nigeria, especially the current state of the sector, which is engulfed with the effect of the global decline in oil price that has resulted in non-performing loans, deterioration of the bank asset quality, laying-off of staff amongst others. This is one of the reasons why the profitability of the banking sector deeply depends on the efficient management of a bank’s working capital. Therefore, the objective of this study is to examine how profitability of banks can be enhanced through the working capital management. To empirically carry out the analysis, panel data which consist of ten (10) deposit money banks in Nigeria for seven years (2010–2016) employing the panel fixed effect, panel random effect and the pooled OLS for the two models, which were used as proxies for bank profitability, which includes return on asset (ROA) and return on equity (ROE) to examine the best measure for bank profitability, with the indicators of working capital; net interest income, current ratio, profit after tax, and monetary policy rate. Results of the study showed that working capital management has a significant effect on the profitability of the selected banks and that return on asset is a better measure for bank profitability. Therefore, the study recommends that there should be a periodic review of the minimum capital base of the Nigerian deposit money banks so as to mitigate the effects of inflation and inculcate the consequence of time value of money, because the purchasing power of one (₦1) naira or one ($1) dollar today would not be sufficient to purchase what it can purchase today for tomorrow.

According to the stages of the banking system stability monitoring, the analysis of caus¬al links is used to identify the causes of the crisis trends spreading and the rationale for the most effective levers of regulatory influence on the banking system parameters by the central bank.
The research is based on the use of the canonical correlation method for structuring causal links between the indicators for the assessment of the banking system stability, which are grouped into four sub-indices (assessing the intensity of credit and financial interaction in the interbank market, the effectiveness of the banking system functions, structural changes and financial disproportions in the banking system, activities of systemically important banks); the method of regression analysis and the calculation of elasticity coefficients is also used to assess the sensitivity of the banking system stability to changes in parameters that characterize the banking regulation instruments.
The article analyzes the results of quantitative and qualitative assessment of the banking system stability (comparison of actual results of the evaluation with the data for previous years and comparison of values of stability indicators with critical values). The causes of detected deviations are determined taking into account the results of applying the canonical correlations method. Regression models have been constructed to confirm the dependence of the banking system stability index on the change in parameters that characterize banking regulation instruments, and to determine the most effective of them. Practical testing of submitted proposals is realized based on the Ukrainian banking system indicators for 2007–2016.

Ukrainian banking institutions conduct their activity under the influence of various risks, which create critical situations for them. In this context, banks should pay more attention to their own security. The article analyzes the theoretical approaches to the concept of “banking security”, examines the level of banking security as a component of the financial and economic security of the state, and determines the ways to improve it. Banking security was analyzed based on the data of the National Bank of Ukraine and other banks that are part of the banking system of the country.
The current state of the banking system shows a decrease in the security since 2014 to the “danger zone”. This is facilitated by a great number of problem loans and foreign capital in the authorized capital of banks; the predominance of short-term lending over long-term one; continued unprofitableness and low liquidity of bank assets. Banking security was the guarantor of achieving financial security of the state. Therefore, the article outlines directions for improving the operation of banking institutions and the banking system as a whole, which will allow to improve banking security in the short term. This is, first of all, the legislative consolidation of the creditor rights protection, the expansion of the lending process, including in foreign currency, with the predomi-nance of long-term loans, the banks’ work in the direction of increasing their assets profitability, optimizing administrative costs, developing and using the latest informa¬tion technology to ensure the effective operation and information security of banks.

The current global financial market is witnessing the activation of cryptocurrency as a payment instrument and a means of accumulation. However, the risks of money laundering, terrorism financing and tax evasion that cryptocurrency transactions imply lead to the need to implement their state regulation, an important component of which is tax control.
Therefore, the purpose of the article is to substantiate the value orientations when forming the system of cryptocurrency transactions tax control in Ukraine taking the positive experience of developed countries into account. The scientific results of the study consist in the emphasizing structural, functional, systemic and institutional approaches to understanding tax control, which became the basis for identifying the features of cryptocurrency transactions as a tax control object.
It was revealed that the lack of personalization of the agreement parties, the relatively high level of information security, free international turnover and a decentralized payment system are the factors of the cryptocurrency market further development. On the other hand, this leads to the loss of tax revenues for Ukrainian budgetary system, taking into account the forecasted trends in the development of the cryptocurrency market by 2022 through methods of sums, least squares and expert estimates. Given the institutional approach to the understanding of tax control, an institutional structure of the cryptocurrency transactions tax control in Ukraine is proposed.
It is established that domestic state institutions are able to carry out tax control over these transactions. It is also determined that introducing fiscal control will result in the receipt of additional revenues by budgets, reduction of shadow economy, counteraction to cybercrime and terrorism financing.
The practical importance of the results is in the need to form an effective system of cryptocurrency transactions tax control as a function of public administration.
It has been determined that transactions on cryptocurrency supply, on the determining exchange rates and transactions on cryptocurrency disposal should be an object of tax control in Ukraine. Mining transactions, receipt of income (profits) in the cryptocurrency are subject to general taxes, depending on the taxpayer’s legal status, in particular, personal income tax, corporate income tax and a unified social tax (UST). Taking into account the EU recommendations on the non-application of value added tax in the cryptocurrency transactions taxation, it is not appropriate to implement it in this area. Establishing tax control over cryptocurrency transactions will expand the powers of state authorities that are empowered to control observing financial discipline by economic agents in Ukraine and the financial capabilities of state and local budgets.

This study aims to test the effect of applying the model of the Committee Sponsoring Organizations for enterprise risk management (COSO-ERM) on reducing fraudulent financial reporting in commercial banks operating in Jordan. Furthermore, the study identifies the role of each board of directors, audit committee, executive management, human resource management, and internal audit as one of the corporate governance mechanisms in enhancing the effectiveness of internal control systems. The study revealed an impact of applying the Committee of Sponsoring Organizations model for enterprise risk management (COSO-ERM) on preventing fraudulent financial reporting, where it reached influence around 77.8% on the dependent variable (fraudulent financial reporting). The study also found that each of internal control, event identification, risk assessment and response, and control activities variables affects dependent variable (fraudulent financial reporting) in commercial banks operating in Jordan.

Each bank manager should understand that the use of modern personnel management technologies is essential to motivate employees to work efficiently. Coaching is one of the ways to influence employees, it focuses on the formation of employee behavior in such a way as to maximize the independence and effectiveness of the decisions taken. To date, this kind of personnel management is becoming more relevant and significant. The purpose of the study is to determine the methods of coaching and its algorithm in personnel management, the possibility of borrowing the foreign companies experience, as well as its effective use as an innovative approach to personnel management. Scientific findings of leading scholars in personnel management, especially coaching, make the theoretical basis of the research. The research uses the methods of analysis, synthesis and comparison. The article describes the category of “coaching”, defines its main characteristics, functions and tasks, examines the use of coaching in the Coaching Policy on the Central Bank of Ireland, analyzes the current implementation of coaching in Ukrainian banks and rationalizes the relevance and prospects for using coaching by Ukrainian banks.

Amongst other causes, the excessive and uncontrolled credit growth, the high levels of leverage with insufficient high-quality capital funding, the high degree of systemic risk accompanied with the inadequate capital buffers and the insufficient liquidity buffers and excessive exposure to liquidity risk (Coen, 2016) in the early 2000’s led to first global financial crisis of the millennium in 2008–2009. Although there has been a global effort to consolidate the financial markets, different countries had different levels of regulatory response to the financial crisis, which resulted in different speed of recovery and impact on internal management control processes. This paper delivers a comprehensive review of the key global changes in the financial market and banking regulations since the 2007–2008 financial crisis by conducting a systematic review of the published papers, directives and regulations of the global, especially the new and existing American, European and Ukrainian financial regulatory bodies and International Organizations such as the Basel Committee, IMF, FSB, EU Parliament and Commission. Trend analysis provides some evidence for the stabilization effect of the new regulations, especially in case of countries with stricter supervisory frameworks (such as the Basel Standards). Finally, the impact of the regulatory environment’s changes on the existing internal controlling systems and functions of financial institutions is assessed by comparing the key pre- and post-crisis states of the different management control functions.

The purpose of this paper is to investigate the determinants of customer banking right awareness regarding banking products and services in Ghana. A survey of 569 bank customers was conducted in Metropolitan Assemblies in Ghana, using a structured questionnaire with Likert-type questions. Customers were conveniently intercepted as they walked out of universal banks. Ordered probit estimation technique was used to test the research hypotheses. The study revealed that whilst bank variables (duration and number of visits) improve customers’ knowledge on bank products and services, demographic factors (age, marriage, income) enhance the level of awareness customers have with regards to bank products and services. The study also revealed that education reduces it in Ghana. Sources of information such as banking exhibitions and fairs, family and mass media improve customer banking right awareness, however, bank staff negatively affect awareness level. The study advises banks to pay particular attention to sources of information, especially bank staff, bank brochures, mass media, exhibitions and fairs. Also, age and income segment of customers should be considered when attempting to improve customer banking right awareness for satisfactory service delivery.

The article analyzes the influence of inflation on economic growth and substantiates the main directions of increasing the effectiveness of the central bank's anti-inflation policy.
In order to determine the limit of inflation, the excess of which has a negative impact on the economic growth, the relationship is analyzed between the inflation rate and the real GDP growth rate on the basis of IMF statistics using the example of 158 countries. It was determined that in 2010–2017, in the global economy, the 6.0% inflation was the marginal value of the inflation rate, beyond which the economic growth rate declined or slowed down.
Given the inverse relationship between the inflation rate and the real GDP growth rates as well as empirical calculations for the period 1996–2017, the threshold for inflation rate for Ukraine at the level of 4.51% was determined based on empirical calculations for the 1996–2017 period. The results indicate that the National Bank of Ukraine set the inflation target above the level of the calculated threshold inflation.
It has also been established that the link between the rates of nominal GDP growth, as opposed to real GDP, and the inflation rate, is more direct and more tight. It is substantiated that to analyze such dependence it is better to use GDP deflator instead of CPI. The results indicate that deflation constrains economic growth much less than inflation.
In order to increase the effectiveness of the central bank’s pro-cyclical monetary policy aimed at supporting economic growth, the relationship between the rates of real GDP growth and the indicator characterizing the gap between the growth rates of M3 and inflation, which actually reflects the real money supply dynamics, is determined. The results obtained allowed to conclude that in 2009 and 2014-2017, the artificial “squeezing” of the money supply took place in Ukraine, resulting in a decrease in the level of the economy monetization by 22.0% in 2017 compared to 2013.
It has been proved that in order to minimize the negative impact of inflationary processes on economic growth, the policy of the National Bank of Ukraine should be aimed at eliminating the artificial squeezing of the money supply through a reasonable increase in the economy monetization and the implementation of an effective monetary policy.

Weak corporate governance in financial institutions has been a contributing factor of the financial crisis. The topic has, therefore, become the key priorities of banking supervision, because one of the takeaways was that. The article gives an overview about the newly established European Banking Union and about its structure focusing on the first pillar, the Single Supervisory Mechanism (SSM). In a second step, the focus is laid on the recent regulatory changes regarding corporate governance, the related supervisory practice and implications for European banks. Overall, the conducted changes in the regulatory framework, especially regarding corporate governance, seem to meet the objective of ensuring safety and soundness of the European banking system. Room for improvement is found regarding proportionality and transparency of the supervisory practices as well as its influence on banks’ profitability.