Dynamic framework for strategic forecasting of the bank consumer loan market: Evidence from Ukraine
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Author(s)Andrii KaminskyiLink to ORCID Index: https://orcid.org/0000-0002-6574-8138
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Nataliia VersalLink to ORCID Index: https://orcid.org/0000-0002-8801-6351
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Oleksii PetrovskyiLink to ORCID Index: https://orcid.org/0000-0003-0254-5752
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Nataliia PrykaziukLink to ORCID Index: https://orcid.org/0000-0002-7813-8590
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DOIhttp://dx.doi.org/10.21511/bbs.18(3).2023.08
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Article InfoVolume 18 2023, Issue #3, pp. 87-100
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151 Downloads
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Creative Commons Attribution 4.0 International License
Accurate forecasting of consumer loan market behavior gives banks a huge potential to optimize their credit strategies by proactively adapting to external changes. This study aims to analyze and predict consumer loan demand, supply, and profitability in the Ukrainian banking sector. Using a systemic dynamic approach, the interplay of five key factors is considered: central bank policies, GDP fluctuations, changing competitive landscape driven by FinTech companies, investment in government bonds as an alternative to loan granting, and severity of credit risk management.
The developed dynamic model for the bank consumer loan market in Ukraine offers predictive capabilities enhancing decision-making and strategic planning in the banking sector and can be adapted in open small economies. Within the proposed systemic dynamic model, five scenarios were explored. Compared to the base scenario, a 4 p.p. increase in the key policy rate results in UAH 4.7 billion decrease in demand for bank consumer loans and a UAH 0.55 billion reduction in lending profitability based on the year’s results. Fall in GDP by 6 p.p. leads to a decrease in the supply of bank consumer loans by UAH 6.9 billion and a decrease in lending income by UAH 1.3 billion based on the year’s results. Scenario with the decline of FinTech portfolio by 20 p.p. quarterly leads to an increase in demand for bank consumer loans of UAH 8 billion. A 4 p.p. rise in government bond yields leads to a UAH 17 billion reduction in the supply of consumer loans in the same quarter.
- Keywords
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JEL Classification (Paper profile tab)G21, E44, E47
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References53
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Tables3
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Figures10
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- Figure 1. Causal loop diagram of MBCL
- Figure 2. Stock and flow SD diagram of the model
- Figure 3. Consumer loan portfolio outstanding: comparison of historical data and simulation within the SD model
- Figure 4. Portfolio of government bonds: comparison of historical data and simulation within the SD model
- Figure 5. Equity capital: comparison of historical data and simulation within the SD model
- Figure 6. Reserves/write-offs: comparison of historical data and simulation within the SD model
- Figure 7. Scenario analysis demand for new bank consumer loans
- Figure 8. Scenario analysis of supply of new consumer loans by banks
- Figure 9. Scenario analysis of consumer loan portfolio outstanding
- Figure 10. Scenario analysis of profit from bank consumer lending
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- Table 1. The impact of external factors on model parameters: in total
- Table 2. Equations of the main variables of the model
- Table 3. Data for scenario analysis
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Impact of the COVID-19 pandemic on bank efficiency in Vietnam
Nguyen Minh Sang
doi: http://dx.doi.org/10.21511/bbs.17(1).2022.02
Banks and Bank Systems Volume 17, 2022 Issue #1 pp. 13-23 Views: 1951 Downloads: 1030 TO CITE АНОТАЦІЯBanking system is an important part of the financial system of each country. The operating efficiency in the commercial banking system will provide the tools and financial products more attractive and relevant to the needs of actors in the economy. The purpose of this paper is to analyze the impact of COVID-19 on the efficiency of 26 Vietnamese commercial banks. The paper uses a quantitative method with the nonparametric frontier analysis, data envelopment analysis (DEA) approach, to measure the efficiency of Vietnamese commercial banks. The paper adopts an intermediation approach as the banks are viewed as financial intermediaries providing financial services and payment services to entities in the economy. Research findings reveal that Vietnamese commercial banks have effectively leveraged the positive impacts of the COVID-19 pandemic, since the average efficiency in 2020 improved over the pre-pandemic period in 2019 on the same models for comparison and estimation. Based on such findings, the study makes some suggestions and recommendations to help Vietnamese commercial banks increase their operational efficiency in the context of the prolonged pandemic.
Acknowledgment
The author wishes to acknowledge support from the Banking University – Ho Chi Minh City. This research was made possible thanks to all valuable support from relevant stakeholders. -
Competition, bank fragility, and financial crisis
Dewi Hanggraeni
doi: http://dx.doi.org/10.21511/bbs.13(1).2018.03
Banks and Bank Systems Volume 13, 2018 Issue #1 pp. 22-36 Views: 1669 Downloads: 435 TO CITE АНОТАЦІЯThis paper examines how competition affects bank fragility and how this relation varies in normal times and during a financial crisis using the data from Indonesian commercial banking industry. The author finds significant evidence, both statistically and economically, that more competition reduces bank fragility. In particular, the author finds that a decrease in Herfindahl-Hirschman Index (HHI) of deposits by 100 points leads to an increase in bank Z-score by 14.22 percent from its mean. Similarly, a decrease in HHI of loans by 100 points leads to an increase in Z36 by 20.44 percent. This finding is consistent across different kinds of robustness tests, including endogeneity, as well as alternative bank fragility and competition measures. However, this competition-stability nexus holds only in normal times and is reversed during a financial crisis. This suggests that the impact of competition on bank fragility is conditional on the economic condition.
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Bank-specific vs. macro-economic factors: what drives profitability of commercial banks in Saudi Arabia
Farkhanda Shamim ,
Bora Aktan ,
Mohammed Attaitalla Abdulla ,
Nabeel Mohammed Yaseen Sakhi
doi: http://dx.doi.org/10.21511/bbs.13(1).2018.13
Banks and Bank Systems Volume 13, 2018 Issue #1 pp. 139-149 Views: 1651 Downloads: 247 TO CITE АНОТАЦІЯThe goal of this study is to determine the elements that contribute to the profitability of commercial banks in Saudi Arabia. The study is important due to the fact that Saudi vision 2030 foresees Saudi Arabia as a global investment powerhouse and fulfilling this objective requires a profitable banking sector. The method chosen for the study is multiple regression analysis. The sample data is taken for the period ranging 2009 and 2015 for the 12 local banks. The research concludes that bank’s internal factors specifically, bank size, liquidity, credit risk and operational efficiency are significantly determining the profitability in the banks as compared to the economy’s macro-economic variables.
