COMPARATIVE ANALYSIS OF STATE-OWNED BANKS’ ROLE IN THE ECONOMY OF EASTERN EUROPE COUNTRIES AND UKRAINE

Abstract

The state-owned banks (SOB) hold a prominent position in the national banking systems of most Eastern European countries. In this region, the BUDCs are specialized and mainly represented by national development banks and export-import banks. There is no development bank inUkraine, and the domestic export-import bank, by its profile, runs universal business model that covers retail and corporate clients, as well as a bank-to-bank function.In general, the SOBs mainly implement four types of national strategic programs: infrastructure development, support for small and medium-sized businesses, regional development, and overcoming sectoral imbalances. These programs are broken down by product into loans, guarantees and subsidies. In some countries, the SOBs also maintain student loans, mortgage loans, support for innovative and start-up businesses. The sources of funding for these programs are capital, funds raised from international financial institutions, and debt through debt issuance. As a rule, the SOB implements these programs through partner financial institutions and regional funds. The indicators of the effectiveness of these programs are the volume of loan portfolios, the number of enterprises created and saved jobs. The quality and profitability of loan portfolios are of secondary importance, but they are also taken into account in evaluating the performance of SOBs.Based on a comparative analysis of the SOBs’ performance, the authors concluded that it is necessary to implement similar programs inUkraine, taking into account the stage of development of the national economy, sectoral and regional disparities. Firstly, it is necessary to increase the scope of preferential lending to priority industries and regions, with the offer of credit products, loan guarantees and interest rate subsidies. Second, as a national development bank, it is advisable to consolidate one of the state-owned banks, which should undergo asset rehabilitation, transform the resource base, enter the domestic and foreign borrowing markets. Third, the transformation of the public banking sector inUkraineshould occur in parallel with the approval by the Government of Ukraine of national and regional programs of credit stimulation of the economy. It is advisable for each financial support program, to establish key performance indicators (quantifiable and qualitative goals) and to provide monitoring of performance, with adjustments of directions and priorities as needed.