Assessing the stability of the banking system based on fuzzy logic methods

This paper aims to examine the impact of Good Corporate Governance (GCG) practice on bank stability and performance. Governance is measured using the GCG rating that covers eleven aspects. The authors apply instrumental regression to link governance to performance and stability. The study covers a sample of 150 banks. The result shows that bank stability can mediate bank governance and bank performance. On the determinant of bank performance, it can be concluded that the GCG rating is positive and directly influences bank performance. Bank stability is also positive for bank performance indicating the indirect contribution of the GCG rating to bank performance. NPL, LDR, CAR and bank’s size (LASSET) are all negative and significant. The aim of this paper is to provide strong empirical evidence on the importance of governance and stability for performance. The limitations of this paper are the size of the sample and that it only covers public banks which are theoretically required to apply better governance in all aspects of their business by the Capital Market Authority.

In the article, the essence of the concept of a banking institution “capitalization” is revealed. The current state of capitalization level of domestic banks is investigated. The directions of strengthening the capitalization are offered, which will increase the com¬petitiveness of domestic banking institutions in the world financial market and will ensure the national economy stability on the way toward integration into the world economy.
It is proved that the prospects for the development of any bank are largely determined by its capitalization level. Lack of proper development inhibits both individual banks and the banking sector as a whole.
In the context of the recent financial crisis, the provision of sufficient capital for banks has been one of the key issues, because the lack of capital was the greatest threat to the banking system stability. With this in mind, the issue of the banking system capitaliza¬tion is particularly topical.
Today, the development of the Ukrainian banking system under economic instability has faced the increase in competitiveness of domestic banks compared with foreign ones, in order to preserve the national priorities of the banking system in general under conditions of foreign capital movement.
The processes of concentration in the banking system of Ukraine are analyzed using Herfindahl-Hirschman index in terms of assets and equity, allowing to estimate the level of monopolization and, therefore, the impact on economic development. To con¬sider the increase in the level of capitalization and reliability of the banking institutions of Ukraine, it would be advisable, first of all, for banks to improve the quality of capital and to ensure a sufficient level of coverage of risks taken by banks.

The article deals with topical issues to develop the banking sector in Kazakhstan as their condition assessment, weaknesses, strengths, problems and basic ways of development of Kazakhstan’s second-tier banks in the current environment, these issues are discussed in this article and determine the relevance of the material presented. The need to address the main problems in the development of the banking sector is due to the fact that it is represented as a fundamental element of the financial system. Moreover, under the modern conditions, it is subject to the impact of financial globalization, crisis phenomena in the world economy, the growth of uncertainty in the world financial market, which determines a number of negative consequences for the stable development of banking activities. Effective functioning of the banking system allows ensuring the sustainable economic development of any state, as the banking sector participates in the redistribution of funds and financing of the real sector of the country’s economy. At the present stage of the development, the issues of dealing with the key problems of the development of the banking sector acquire special relevance on a global scale, since the financial crisis has revealed the shortcomings of the current system of banking regulation and supervision. In this regard, in the crisis conditions, the state intervention in regulation of banking activities has intensified, the role of risk management in commercial banks has increased, the requirements to the bank’s capital, and the quality of assets has increased. Volatility and instability of the world financial markets require the search for new approaches in the implementation of banking activities to maintain sustainable development, increase margins in the banking business, which determines the relevance of this study. The main results of the research show the influence of external and internal factors that inhibit the development of banking activity.