Use of causal analysis to improve the monitoring of the banking system stability

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

Theoretical and Methodological Aspects of Assessing the Financial Stability of the Banking System

The aim of the article is to substantiate the directions and develop methodological tools for assessing the financial stability of the banking system. Taking into account the emergence character of the banking system as a complex systemic formation and the results of the analysis of scientific literature, arguments are given regarding the need to assess its financial stability using the following groups of indicators: intensity of the credit and financial interaction in the interbank market; functional load of the banking system in the context of ensuring macroeconomic development; structural changes and financial imbalances in the banking system and the activity of systemically important banks. There proposed a methodological approach to assessing the financial stability of the banking system, which implies quantitative integral assessment of its level and qualitative interpretation of the results using the methods of entropy and “golden section”, respectively. The application of the improved approach will allow identifying sources of risk distribution in the banking system and develop a set of effective regulatory measures in accordance with a certain level of its financial stability. Prospects for further research in this direction are to determine the dominants of ensuring the financial stability of the banking system as well as the threshold values of its assessment indicators, which serve to diagnose the crisis and can be used as a tool for the macro-prudential policy