COMPARATIVE ANALYSIS OF BANK INSOLVENCY PRACTICES IN THE WORLD AND IN UKRAINE

Abstract

The study is devoted to the analysis of bank insolvency as a critically important phenomenon that affects the stability of the banking system and the economy as a whole. According to theoretical provisions, bank insolvency is defined as their inability to fulfill obligations due to insufficient assets or lack of liquidity. The paper details the main signs of bank insolvency, in particular the monetary nature of obligations, the default deadline and the minimum amount of overdue claims. Particular attention is paid to the relationship between the solvency and liquidity of banks, which are considered as the main components of their financial stability. Solvency is defined as the ability to fulfill obligations in full, and liquidity is the ability to fulfill obligations in a timely manner, maintaining a balance between assets and liabilities. In the context of international experience, the development trends of the EU banking system are examined, in particular the reduction in the number of banking institutions and changes in deposit and credit operations. It is noted that the stability of the EU banking system is supported by the implementation of the Basel standards and the early warning system. The Ukrainian banking system is presented through the dynamics of assets and liabilities, as well as through an analysis of the 2014–2017 crisis. Key regulatory tools are considered, in particular, temporary administration, debt restructuring and bank liquidation. The “Kyiv approach” to the resolution of problem loans, based on the 2016 Law on Financial Restructuring, is separately highlighted. The results of comparing international experience with Ukrainian practice showed that the greatest differences are due to legislative and institutional features. The authors emphasize the need to adapt successful international practices to increase Ukraine’s financial stability. The conclusion is made that effective management of bank insolvency will contribute to strengthening confidence in the financial sector and economic growth of the country.