Financial crisis as incentive to banking sector consolidation

Abstract

Introduction. Necessity for reforming Ukraine’s banking system is a topical issue for a long time. Sustainable economic development is possible in those countries where banking system is safe, trustable and resistant to financial and economic shocks, with clear ownership structure and transparent reporting. Foreign countries experience points out that consolidation is one of the best ways of banking system reforming. It is especially important for countries with vulnerable, unstable banking systems, where there are a lot of institutions that avoid to participate in loan provision to national economic agents.

Purpose. The aim of the article is to clarify organizational issues of Ukraine’s banking sector consolidation taking into consideration the best practice of banking reforms in the CEE region.

The methodological base. The aim is reached with the help of general scientific and specific methods of research. The tasks are solved by methods of observation, comparison, analogy, statistical methods to analyze peculiarities of banking system development in Ukraine, in CEE countries, EU and Eurozone, and also methods of data visualization.

Results. Research of specifics of banking system development in Ukraine in 2001-2016 helped in discovering that only financial crisis that began in 2014 supported the beginning of banking sector consolidation process. Administrative foundations required for meaningful banking sector consolidation in Ukraine are recognized. Market consolidation triggers for the next consolidation stages are defined. The article focuses attention on further research in the field of risk management of enormous concentration of different banking services market segments in Ukraine.