Oleksenko K. Banking System Resilience under Financial Globalization.

The research investigates theoretical and practical aspects on how to determine, estimate and assure banking system resilience under financial globalization pressure. The thesis defines basic terminology of the banking system resilience and outlines its borders if compared to other economic terms. The financial globalization is recognized as the crucial factor to the banking system resilience in the modern world, as it brings external shocks to the fore, thus limiting capacities of the national regulatory bodies to exercise relevant control. Banking systems are developing under the financial globalization pressure in the forms of transnational banks, international financial consolidation, increasing volume of speculative operation that exceed credit amounts to the real economy, and reforming of the international banking system regulation and supervision. The study argues in favour of macroprudential regulation that shifts focus from a micro level to the soundness and resilience at banking system level, suggests cross-border coordination deals with countercyclical, and differentiate measures. The most efficient way of handling exposure to exogenous or endogenous risks in terms of economic and social output is to apply relevant instruments at early stages to prevent systemic infection. Author analyzes and compares characteristics of the banking system resilience among advanced and emerging economies. The latest global financial crisis caused serious distortions in banking systems of the advanced economies, and credit volumes have not been restored despite expansionary monetary policy. Banking systems of the emerging markets, especially Islamic, showed its resilience, which is mostly due to the basics of its functioning. In order to maintain banking system resilience under financial globalization emerging economies must ensure that corresponding regulatory institutions are in place, there is a plan of action in case of sudden shocks, implementation of administrative measures takes short time and is communicated well to the society, the central bank has close cooperation with regulatory bodies from countries of residence of major foreign investors in the banking system, and there are vehicles or programs which allow obtaining liquidity from the international financial markets in case of short-term shortage. Author explores ways of estimating the banking system resilience and presents a new complex financial soundness indicator which can be used for cross-jurisdictional comparative analysis and building ratings. The thesis includes economic model to investigate dependencies between financial soundness from one side and macroenomic and structural factors from the other. The study warns against considerable exposure of the Ukrainian banking system toward exogenous shocks that can be outlined in the following items: strain on liquidity in the international money and capital markets, high cost of attracting resources by domestic banks from outside, currency fluctuations, imbalances in the balance of payment. All this proves to be reinforced with internal problems in macroeconomic and microeconomic areas. The thesis makes recommendation for improving prudential regulation in Ukraine by taking effective control over the internal and international financial consolidation that should lead to increase in the capital adequacy ratio in the banking system and mitigate consequences of insolvent banks' bankruptcy. Also it proposes to comply with the global regulatory framework by switching to macroprudential regulation which implies deep changes to the structure and policies if the National Bank of Ukraine.