REGULATION OF TRANSNATIONAL BANKS CREDIT EXPANSION

Abstract

The article identifies the phases of the credit cycle, namely, credit squeeze, credit depression, lending, credit expansion and credit boom. The author’s algorithm for identifying the phase of the loan cycle based on the analysis of the dynamics of credit finds practical application within the article. An analytical evaluation of different phases of the credit cycle was carried out on the example of Ukraine during 2002-2017. The scientific foundations of the use of countercyclical tools for macroprudential regulation of transnational banks credit expansion have been formed, including the mitigate the negative consequences of the implementation of the systemic risk of the activities of transnational banks. The list of macroprudential instruments depends on the level of the country’s economic development, the degree of its integration into the global economy, the market capacity and the number of financial intermediation institutions. In order to counteract the procyclical development of the financial system, central banks can initiate the creation of countercyclical and conservative capital buffers, tighten requirements for liquidity norms and limits for the permissible level of leverage. To minimize systemic risk, the article can be imposed limits on currency gaps and restrictions on lending in foreign currency. To prevent the effect of “infecting” the banking system, additional capital requirements are used for systemically important financial institutions, requirements for prompt disclosure of information on problems with financial stability of banks and advance development of a “rescue plan” for banking institutions. This will help improve the efficiency of banking supervision, predetermine the proper development of domestic banks and enable them to become full participants in international banking relations in the context of the globalization of the world economy and financial markets.