Ontology of financial and banking crises
Authors:   Association of Ukrainian Banks, Dubas Andrii 
Published: December 2024

Introduction. Financial and, especially, banking crises are always in the focus of attention of researchers and supervisory bodies of the financial sector of all countries. The fundamental foundations of the study of crisis phenomena as a whole have already been formed, but certain directions require further development. In particular, this applies to the conceptual apparatus of banking crises and the analysis of their reasons.

Problems Statement. The most studied is the ontology of economic and financial crises, as well as a spectrum of concepts that can be used to assess the financial state of a business. However, regarding the assessment of the threat of a crisis situation in the banking sector, the existing conceptual apparatus is not yet sufficient. In particular, notions such as depression, recession, and resignation are not used to structure financial and banking crises, even the concept of “banking crisis” is not yet clearly defined. Such a concept as financial balance is not common in relation to the assessment of banks, although it is actively used in the diagnosis of enterprises.

Purpose. To expand and improve the existing conceptual apparatus for assessing the state of the banking system, in particular such concepts as banking depression, recession, resignation; sustainability, stability, balance steady state, reliability, solvency of banks as well as to calibrate the reasons for their liquidation for the period 2018-2023, based on the empirical analysis

Methods. General scientific and special research methods were used: abstract-logical, description, comparison, calibration of important elements, grouping, regression analysis, synthesis, generalization.

Results. Systematized approaches to defining the concepts of financial and banking crises, such concepts as banking depression, recession, and resignation were introduced, which characterize the depth of banking crises. Taking into account the fact that such crises are divided into local, systemic, and global crises by scale, a depth/scale matrix of banking crises with examples was built. Approaches to defining such concepts as sustainability, stability, balance, reliability, solvency of banks as a toolkit for forming methodological bases and regulatory documents regarding their resistance to crisis phenomena have been improved. Empirical analysis of bankruptcies of 18 Ukrainian banks for the period 2018-2023 was carried out in order to determine their factors.

Conclusions. It is appropriate to classify banking crises according to various characteristics and introduce certain quantitative and qualitative parameters that describe them. Regarding the banking system as a whole, it is appropriate to use such concepts as stability and stress resistance, and for individual banks - solvency, stress resistance and financial balance, which is assessed by the balance of active-passive operations and the fulfillment of economic standards. Correlation-regression analysis of bankruptcies of 18 Ukrainian banks for the period 2018-2023 showed that their attributes were mostly low liquidity and capitalization. At the same time, no key differences from the group of operating banks were found in a number of indicators. This indicates the multifactorial nature of the impact on the financial stability of the banking system.