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Modeling of the financial system’s stability on the example of Ukraine

Author

Listed:
  • Inna Shkolnyk

    (Sumy State University, Ukraine)

  • Serhiy Kozmenko

    (University of Social Science, Poland)

  • Olga Kozmenko

    (University of Economics and Innovation in Lublin, Poland; Kharkiv National University of Economics, Ukraine)

  • Volodymyr Orlov

    (University of Customs and Finance, Ukraine)

  • Fathi Shukairi

    (University of Customs and Finance, Ukraine)

Abstract

Research background: Financial stability is one of the key tasks in the functioning of the country’s financial system. National financial systems have significant differences in the level of their development, structure and approaches to regulation. There are no uniform world standards for methods and indicators of assessing financial stability. International financial institutions, including the International Monetary Fund, only outline certain areas and offer an indicative list of indicators that should be taken into account. Purpose of the article: Taking into account the peculiarities of the subject and object structure of Ukraine’s financial system, this study formed groups of indicators that reflect the state of financial depth, level of access and efficiency of the financial system, systematized by subject (financial institutions) and object financial markets) characteristics. Methods: The basis for the formation of a set of indicators is a matrix of characteristics of the financial system’s stability, which is formed according to the principle of 4x2 proposed by experts of the International Monetary Fund. The list of indicators to calculate the integrated indicator that characterizes the stability of the financial system of Ukraine, covers the period 2007–2019 and includes 29 indicators that take into account the peculiarities of its formation and development. Harrington’s desirability function is used to determine the integrated indicator that characterizes the state of financial stability. Findings & value added: The intermediate calculations obtained by modeling groups of indicators showed that the level of access to the financial system and the state of its depth are balanced during the study period (the range of variation of integrated indicators for these groups is minimal — from 0.1 to 0.18), is at a satisfactory level and the basis for ensuring the financial system’s stability. Conversely, the efficiency of the financial system is low, and characterized by a high degree of volatility (range of variation — 0.51). The obtained integrated indicator, which is in the range from 0.41 to 0.54 on the Harrington desirability scale, makes it possible to assess the state of the financial system’s stability in Ukraine as satisfactory, but with a high level of sensitivity to both external and internal shocks.

Suggested Citation

  • Inna Shkolnyk & Serhiy Kozmenko & Olga Kozmenko & Volodymyr Orlov & Fathi Shukairi, 2021. "Modeling of the financial system’s stability on the example of Ukraine," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(2), pages 377-411, June.
    • Handle: RePEc:pes:ierequ:v:16:y:2021:i:2:p:377-411
    DOI: 10.24136/eq.2021.014
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    References listed on IDEAS

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    More about this item

    Keywords

    financial institute; financial market; stock market; financial depth; assets; efficiency;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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