HE IMPACT ECONOMIC CYCLES ON BANKING
Keywords:
the cyclical nature of economic development, credit, broadcast risks, quality of loan portfolio, reserves, countercyclical regulationAbstract
In the formation of the economic cycle, the banking system plays a dual role: the growth phase provides the possibility of speculative behavior, and the phase of the crisis worsens the consequences of its implementation by reducing lending. One of the main causes of recurrence is excessive lending in the boom phase and a significant increase in the share of credit in the sources of financing of enterprises. In Ukraine timeframe manifestation of economic cycles differ from the world. The Ukrainian economy is most pronounced Kuznets cycle, the duration of which is 22 years, the world's duration - 16-18 years.
As Ukrainian practice in the recovery phase (before the crisis of 2008) lending grew rapidly, accompanied by increased risks. However, provisions for credit risk were nedosformovani. This means that the phase of economic growth, banks tend to underestimate the risks that adversely affect the flow phase of decline in economic cycles. The analysis of indicators such as the ratio of loan portfolio to GDP and the ratio of provisions for credit transactions to the total volume of credit portfolio of banks showed that they move in opposite phase.
Underestimating the risks characteristic of the activity of international banks. This has led to the inclusion of Basel III countercyclical buffers designed to prevent bank failures in conditions of excessive credit growth. Decrease the negative impact of credit expansion on the cyclical economy need to analyze global imbalances. The emergence of crises at the global level can be predicted and avoided if reveal the countries or regions that attract too much foreign investment or, conversely, excessive amounts of money to invest in the economies of other countries. In order to avoid the global financial turmoil should be implemented macro-prudential banking supervision at the global level and within individual states or their associations. To avoid underestimating the risks necessary to carry out reverse stress testing and finding the worst scenarios.
