CORRUPTION IN THE BANKING SECTOR AND ITS CONSEQUENCES FOR ECONOMIC SECURITY

Abstract

Corruption in the banking sector represents a significant threat to the economic security of a state, undermining trust in financial institutions, causing financial instability, and increasing risks in international operations. This article examines the primary forms of corruption, including bribery, abuse of office, money laundering, and fraud, as well as the underlying causes of their prevalence, such as institutional weaknesses and insufficient regulatory oversight. The study explores the consequences of banking sector corruption on the economy and proposes measures to reduce corruption levels: strengthening the institutional environment, enhancing regulatory control, implementing modern technologies, improving financial literacy, and fostering international cooperation. The necessity for a comprehensive approach and the interaction of various stakeholders is emphasized to effectively combat corruption and ensure economic security. Corruption in the banking sector can take various forms, including bribery, abuse of power, money laundering, and fraud. One of the primary causes is the weakness of the institutional environment, insufficient regulatory oversight, and a low level of transparency in financial operations. The consequences of corruption in the banking sector are far-reaching. Corruption leads to a decrease in trust in financial institutions, resulting in deposit outflows and reduced investment activity. Financial instability is another consequence, caused by mismanagement of banking assets and liabilities. Additionally, corruption increases the risks associated with international financial operations, potentially leading to sanctions and restrictions imposed by other states. This weakens state control over the economy, making it difficult to implement effective economic policies. To combat corruption in the banking sector, comprehensive measures are necessary. Strengthening the institutional environment and enhancing regulatory control are critical. This involves creating clear and transparent procedures to regulate banking activities and establishing a robust system of accountability and responsibility. The implementation of modern technologies can significantly increase the transparency of financial operations and reduce corruption risks. Blockchain technologies, artificial intelligence, and automated data analysis systems improve control over financial flows and reduce opportunities for abuse. Raising the level of financial literacy among the population and corporate culture within banking institutions is also essential. Financially literate citizens and bank employees better understand the risks and consequences of corruption, contributing to a sustainable anti-corruption culture. Educational programs and training aimed at enhancing knowledge and skills in financial security are vital. Developing international cooperation and sharing experiences in combating corruption is equally important. Integrating international standards and best practices into national legislative and regulatory systems enhances the effectiveness of anti-corruption measures. Cooperation with international financial organizations and participation in global anti-corruption initiatives facilitates the exchange of experiences and resources to combat corruption effectively.