Credit risks in the bank lending system
Economic Annals-XXI: Volume 127, Issue 3-4(1), Pages: 79-82
Citation information:
Vdovenko, L. (2013). Credit risks in the bank lending system. Economic Annals-XXI, 3-4(1), 79-82. https://ea21journal.world/index.php/ea-v127-22/
Larysa Vdovenko
PhD (Economics),
Associate Professor,
Vinnitsa National Agrarian University, Ukraine
vdovenko_larisa@mail.ru
Credit risks in the bank lending system
Abstract. The high risk of credit transactions indicates the growth in the share of overdue loans (in five times average) in the credit portfolios of Ukraine’s banks. A classification of agriculture loans as the most risky, the proportion of loans to agricultural enterprises in total loans declined rapidly – from 6,7% in 2005 to 0,9% in 2009, and in 2011 – is only 1,5%.
Bank’s risk associated with unprofitable agricultural sector, the lack of liquidity in the mortgage and efficient producers of insurance of agricultural production, prevents the development of credit relations. Solving this problem is complicated by inadequate legislation in matters of guaranteeing repayment, lack of integrated risk banking institutions and banking practices in the usage of management practices that effectively reduce the high risk possibility.
Improving the efficiency of farmers and borrowers credit risk mitigation banks contribute the full insurance of agricultural risks and property companies. Unification of large number of methodologies to assess credit risk in a single system with a mandatory consideration of industry specific and comprehensive usage of various risk management techniques in the process of lending activities will improve the efficiency of both individual banking institutions and the banking system as a whole and improve relations with agricultural credit sector.
Keywords: Banking System; Credit Risk; Loan Portfolio Diversification; Limiting; Insurance
JEL Classification: M40
References
- Bilyk, T. O. (2012). Methods to minimize credit risk. Formation of Market Relations in Ukraine, 3(130), 45-54 (in Ukr.).
- Kovalenko, V. V. (2012). Methodological principles of risk management in banks. Formation of Market Relations in Ukraine, 5/1(132), 74-81 (in Ukr.).
- Economic Encyclopedia. (2001). In S. V. Mochernyi (Ed.). Kyiv: The Academy (in Ukr.).
- Zahorodniy, A. G. (2000). Financial Dictionary. Kyiv: Knowledge (in Ukr.).
- Pryidun, L. (2010). Features of credit risk under current conditions and management of bad debts. World of Finance, 3, 39-49 (in Ukr.).
- Marcin, V. S. (2010). The legislative regulation of the credit market in Ukraine. Economy. Finance. Law, 3, 25-29 (in Ukr.).
- Gerasymenko, R. (2012). Problem loans and prediction of their share in the loan portfolio of the bank. Bulletin of the National Bank of Ukraine, 4, 40-46 (in Ukr.).
- Bugel, Yu. (2012). Implementation of strategic objectives of monetary policy as the basis of the Concept of the loan portfolio of commercial banks. World of Finance, 1, 84-92 (in Ukr.).
- Dyba, M., & Yaremenko, S. (2012). Security banking and conditions of its organization in Ukraine. Banking Business, 1, 13-23 (in Ukr.).
- Sinki, J. F. (1994). Management Finances at Commercial Bank. In R. Ya. Levita, B. S. Pincers (Eds.). (Trans. from Eng.). Moscow: Catallaxy (in Russ.).
- Danylyshyn, V., & Stefankin, O. (2012). Problems of overdue loans and solutions. Banking Business, 3(105), 66-73 (in Ukr.).
- Key indicators of banks of Ukraine on January 1, 2012. Bulletin of the National Bank of Ukraine, 2, 39 (in Ukr.).
- Kuznetsova, L. V., & Kovalenko V. V. (2012). Impact of globalization on the financial stability of the banking system. Actual Problems of Economy, 2, 264-272 (in Ukr.).
- Efimova, Yu. (2010). The internal rating in the control system by a credit risk.
Retrieved from http://www.reglament.net/bank/credit/2010_2_article.htm (in Russ.) - Sokolov, E. V. (2001). Complex system of estimation of borrower’s solvency. Russian Entrepreneurship, 2(14), 69-78 (in Russ.).
Received 14.02.2013