POST-WAR CHALLENGES AND OPPORTUNITIES FOR THE UKRAINIAN BANKING SYSTEM DEVELOPMENT

Abstract

The article considers major potential challenges and threats to the development of national banking system in the post-war period. The events of recent years, like COVID-19 pandemics or the onset of the full-scale war in Ukraine, promoted building up of considerable resilience to stress in the banking system. However, the post-war recovery of the economy can prompt reemergence of some new risks and make the adverse impact of certain factors on banking sector more acute; therefore, they merit further study. The underlying methodologies of the study are general scientific methods like analysis, synthesis, systematization, generalization, and comparison, induction, and deduction. The author has analyzed current trends of Ukrainian banking system development. She has singled out key challenges based on categorizing them into general economic that stem from overall economic developments and global economic trends or those specific to the banking system. Special emphasis was put on analysis of security and inflation risks, impact on the banking sector from further growth of the public debt, deficit of balance of payment, migration and displaced persons, global fragmentation of trade, underdeveloped stock market, domination of state-owned banks, and stronger potential competition from global and non-banking financial institutions. Analysis results show that existing challenges may have a strong adverse effect on banks’ loan portfolio composition and quality, deposit policy and availability of funding, and banking sector competition. However, security risks still pose the biggest threat to future development of the banking sector. Based on the study, the author has outlined opportunities for banking system development in the post-war period, in particular, introducing the latest technologies in customer service, innovative banking products, gaining access to capital and best practices from cooperation with international financial institutions. Despite the potential challenges, the banking system remains the leading sector of the financial market; it is capable of playing the key role in the post-war recovery of the national economy.