EFFICIENCY OF COMMERCIAL BANKS’ ACTIVITIES UNDER CONDITIONS OF ECONOMIC INSTABILITY

Abstract

The article examines the theoretical and practical aspects of assessing the efficiency of commercial banks’ activities under conditions of economic instability. The relevance of the study is determined by the growing influence of macroeconomic fluctuations, financial market volatility, geopolitical challenges, and crisis phenomena that significantly affect the stability and performance of banking institutions. The research analyzes the key indicators used to evaluate bank efficiency, including profitability, liquidity, capital adequacy, asset quality, and operational performance. Special attention is devoted to identifying the main internal and external factors that influence banks’ financial results in an unstable economic environment. The study highlights the role of effective risk management systems, diversification of banking operations, and optimization of resource allocation as essential components of sustainable bank development. The impact of digital transformation and financial technologies on improving management processes, customer service quality, and operational resilience is also considered. The article substantiates the necessity of implementing modern approaches to bank management aimed at strengthening financial stability and increasing competitiveness in the banking sector. It is argued that adaptive management strategies, innovation-driven development, and enhanced regulatory compliance contribute to maintaining efficiency during periods of economic uncertainty. The proposed directions for improving banking performance focus on strengthening risk assessment mechanisms, expanding digital financial services, and enhancing strategic planning practices. The results of the study may be useful for banking practitioners, researchers, and policymakers involved in ensuring the sustainable development of the financial system under unstable economic conditions, particularly in emerging and transition economies. Furthermore, the findings emphasize the importance of continuous monitoring of financial indicators and proactive managerial decision-making to ensure long-term banking resilience.