CREDIT POLICY OF A COMMERCIAL BANK IN CONDITIONS OF ECONOMIC INSTABILITY

Abstract

The relevance of credit policy in the activity of commercial banks is extremely important in the conditions of the modern economic environment, which is constantly changing. Research shows that many banks in Ukraine adopt an aggressive credit policy, which can lead to an increase in the riskiness of credit operations. In particular, banks provide loans for long terms and large amounts using loan extension schemes. To increase the stability and reliability of commercial banks in Ukraine, it is important to improve their credit policy. This involves the restructuring of banks, improving the quality of the loan portfolio, balanced distribution of assets, improving the cooperation of banks with the agricultural sector of the economy and ensuring the interests of bank depositors. It is also important to form an extensive credit infrastructure and define a single integrated pricing strategy. In addition, the introduction of the new LCR liquidity standard by the National Bank of Ukraine can positively affect the financial stability of banks, as well as contribute to increasing investments in government securities, which are highly liquid and reliable instruments. Additionally, the enhancement of banks' credit policy necessitates a comprehensive assessment of risk management frameworks. Evaluating and mitigating risks associated with economic fluctuations, such as inflationary pressures or market instabilities, should be a pivotal aspect of this strategy. Moreover, fostering a supportive regulatory environment that encourages responsible lending practices and ensures compliance with international banking standards becomes imperative. This includes implementing robust stress-testing mechanisms to assess the resilience of banks' credit portfolios under adverse economic scenarios. Collaboration with various stakeholders, including government bodies, regulatory authorities, and industry experts, plays a crucial role in formulating a well-rounded and adaptive credit policy. By fostering open dialogue and cooperation, banks can align their strategies with broader economic goals while maintaining financial prudence. Furthermore, investing in financial education initiatives for borrowers to enhance their understanding of credit terms, responsibilities, and risks can contribute significantly to fostering a healthy credit environment. Empowering borrowers with knowledge promotes responsible borrowing behavior and reduces default risks for banks. Lastly, fostering a resilient banking ecosystem requires continuous monitoring, evaluation, and adaptation of the credit policy framework to address emerging challenges and opportunities. It necessitates a proactive stance in responding to evolving market dynamics and economic conditions, ensuring that the credit policy remains agile and responsive. In conclusion, refining the credit policy of commercial banks in Ukraine demands a multifaceted approach encompassing risk assessment, regulatory alignment, stakeholder collaboration, and borrower education. Such measures are pivotal in ensuring the stability, resilience, and sustained growth of the Ukrainian banking system amid the dynamic financial landscape.