CONCENTRATION OF THE UKRAINIAN BANKING SYSTEM: PROBLEMS AND PROSPECTS

Abstract

The article examines the relevance of the issue of concentration of the banking system of Ukraine and identifies the main prospects for reducing the share of the state in the banking services market. The period from 2009-2022 inclusive was chosen for analysis and evaluation, which made it possible to identify the main trends and factors that influenced the growth and decline of such concentration indices as Herfindahl–Hirschman Index and CR in terms of the following indicators: assets, corporate loans, retail deposits, authorised capital, commission income, and interest income. The obtained calculations helped to determine the level of concentration of the domestic banking system. The purpose of the article is to allocate scientific approaches and carry out practical calculations to determine the degree of concentration of the banking system and to determine the need for its deconcentration. The results of the analysis demonstrate the growing scientific interest of both domestic and foreign economic schools in the problem of concentration in the banking system. However, it is worth noting that the peak of publication activity was observed in 2018-2020, with the top three countries being the United States of America, the United Kingdom, and Malaysia. The results of the calculations showed that the number of banks in Ukraine does not have a significant impact on the level of concentration. With a fairly large number of banks in 2013, namely 180 institutions, there was a sharp increase in concentration, but a larger share of the market was controlled by private capital, but since 2017, a larger share of the banking sector has been owned by the state. The author notes that the concentration of market power by state-owned banks has led to the emergence of a monopoly, but transformational measures to reduce the concentration of the banking system should be carried out taking into account the existing financial and economic feasibility. Of course, there is a risk of ineffective management decisions by bank management, but it is the largest state-owned banks that demonstrate the sustainability and profitability of their activities.