NET STABLE FINANCING RATIO OF NSFR AND POSSIBLE CONSEQUENCES OF ITS IMPLEMENTATION FOR THE UKRAINIAN BANKING SECTOR
Abstract
The article is devoted to the problems of the new standard of net stable financing (NSFR) implementation in the practice of the Ukrainian banking sphere. In a whole, the article examines the motives and preconditions for the long-term liquidity ratio introduction and the main advantages that its application by domestic banks should bring. Additionally, more attention is paid to the warnings of economists about the possible negative consequences of further tightening the requirements for the bank liquidity level. Among the main risks of the NSFR ratio introduction are the reduction of credit programs by banks, which will negatively affect the economy, reduction of the Ukrainian banking institutions profitability, as well as the problem of ensuring a sufficient level of liquid investment in underdeveloped financial markets in Ukraine. Moreover, our research has shown that there is no clear pattern between the NSFR ratio implementation and changes in the volume of lending and investment by Ukrainian banking institutions. So, to say, this does not give grounds to claim that in the future compliance with the new liquidity requirements will have a negative impact on lending or profitability of the domestic banking sector. Furthermore, compliance with both NSFR and LCR liquidity ratios since their introduction into Ukrainian banking practice was also analyzed. It is shown that the Ukrainian banking market suffers from superliquidity, which, although provides high financial stability, significantly limits banks potential profitability. Also, the findings of American researchers that large banks tend to adhere to lower values of the NSFR ratio than smaller banking institutions are further researched. So, these conclusions are not true for the Ukrainian banking sector. To sum up, the assessment of future final transformations of regulatory requirements on liquidity and capital adequacy of Ukrainian banks was carried out.
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