Bank lending in Ukraine and simulation of credit activity by methods of system dynamics

The article identifies trends in bank lending to companies and households in Ukraine and considers modeling and integrated mapping of demand and supply of bank loans using the methods of system dynamics. The article shows that by 2020 the main trends in the Ukrainian banking sector are: a) increased dynamics of return on capital (29.7%) and reduced dynamics of interest rates on deposits (6.6%) and loans (14.8%); b) growth of the dynamics of bank loans in general, including the following characteristics: the largest share of the bank loan portfolio is accounted for by loans to economic entities, while loans to households account for 21.9%; loans to households are growing faster compared to the growth rate of loans to businesses; in the sectoral context, the largest share in lending is accounted for by the trade sector; short-term consumer loans predominate in household lending (82%); half of the loan portfolio of commercial banks consists of short-term loans; the share of non-performing loans in the total volume of issued loans remains high (48.75%); c) the deposit portfolio is dominated by household deposits, but in the dynamics there is a tendency to decrease in their share. Based on the methods of system dynamics, the authors present a model that allows to trace the relationship between commercial banks and legal entities and individuals, as well as to forecast the amounts of bank loans in accordance with the demand for loans from businesses and households (weighted by the maximum value credit load) and supply of credit resources by commercial banks. From a practical point of view, characterization of trends in banking, modeling the interaction of major participants in bank lending and determining the volume of bank loans using methods of system dynamics will help identify the main factors influencing the supply and demand of bank credit resources at the current stage of development of Ukraine and predict future dynamics of lending.