MODELLING OF BANKING IN THE CONDITIONS OF ECONOMIC INSTABILITY

Abstract

Objective. The article analyses the models and specificity of banking institutions' activities during conditions of crisis. Methods. The theoretical and methodological basis of the study is based on the main principles and elaborations of domestic scientists and foreign experience in the area of banking activities, personal assessments of the author, etc. In the course of the study, analytical and abstract-logical methods were used, in particular, the use of the method of analysis and synthesis allowed to identify business models of banks; the use of the method of comparative analysis allowed to identify effective business models of banks; the use of the method of expert evaluation allowed to analyse the modelling of banking activities in the context of economic instability. Results. An analytical study of the banking sector in a difficult economic environment has been carried out. It is noted that in recent years, the global macroeconomic environment has undergone dramatic changes and has caused serious challenges to the processes of ensuring economic stability. Crisis situations at the level of a particular country's economy have shown that banks of different legal status differ in their resilience for financial instability. It is established that the stable functioning of the banking sector directly depends on the efficiency and viability of the business models of the financial institutions that form it. It is specified that the assessment of modelling processes in the sphere of banking activity should be carried out with regard to the ability of financial and banking institutions to withstand external and internal threats, as well as their ability to form a stable financial environment. It is asserted that the process of efficiency of banking activities in the context of economic instability should envisage such a condition of financial resources that would allow the bank, by means of efficient use of free cash, to ensure an uninterrupted process of its functioning, thereby improving the qualitative and quantitative indicators of its activity. Therefore, it is crucial to define criteria for the assessment of banking activities that will help to identify and eliminate shortcomings of business models, thereby minimising the risk of loss of financial stability of banks. Scientific novelty. It is noted that in order to successfully model banking activities in conditions of economic instability, banks need to coordinate all strategies, constantly monitor changes and adapt strategies accordingly. For the creation of an anti-crisis strategy as well as for its adjustment, a risk management system and an internal control system are extremely important, moreover, not only at the micro level. It is important to create an appropriate institutional environment at the macro level, including banking supervision and regulation. Practical significance. The novelty of the study lies in the fact that the author provides practical proposals for improving banking activities in the conditions of economic instability.