FINANCIAL STABILITY AND RESTRUCTURING OF PROBLEMED BANKS: AN INSTITUTIONAL APPROACH
Abstract
The article examines the institutional principles of ensuring the financial stability of the banking system in the face of modern challenges and the need to restructure troubled banks. The essence of the institutional approach to the analysis of financial processes is revealed, which is based on the interaction of formal and informal institutions that regulate the activities of banks and determine the effectiveness of financial intermediation. It is determined that financial stability is the result of the coordinated functioning of macroprudential policy, effective banking supervision and a risk management system. Particular attention is paid to the role of the National Bank of Ukraine in implementing institutional reforms aimed at increasing the stability of the financial sector and adapting the regulatory environment to the standards of the EU and the Basel Committee. Modern trends in the restructuring of the banking sector, in particular problem assets, as well as mechanisms for bank rehabilitation, mergers and liquidation, are analyzed. It was established that the institutional architecture of financial stability requires constant improvement in the direction of strengthening corporate governance, transparency, development of insolvency resolution mechanisms and increasing trust in banking institutions. The study identified the main prerequisites for the emergence of problem banks and key institutional elements on which the institutional approach to restructuring is based in accordance with the regulatory organization and the existing legislative framework. As a result of the study, it was determined that institutionalization provides a clear, consistent algorithm of actions that increases the predictability of the system and includes such main stages as: early detection and intervention; temporary administration and diagnostics and resolution (solution). The results obtained can be used to form a strategy for the development of the banking system of Ukraine, improve the regulatory framework and harmonize national approaches with European standards.
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