JEL classification: E58; G21
Introduction. As a result of the development of the economy, the desire of banks to get even more profit and interest people to use their Bank’s services has also increased. This trend leads to an increase in the level of market concentration of banking activities.
The purpose of the article is to analyze the current level of concentration of banking activity in Ukraine and create recommendations for its minimization.
Results. The concentration of banking activity in Ukraine and its impact on the development of the economy are studied. The interpretation of the concepts “concentrate” and “concentration of banking activity” is defined. The dynamics of the number of commercial banks in Ukraine by city of their registration is studied. We analyzed the total financial result for the period under study, which retains negative values, because the number of banks continues to decline, and the pace of this process is measured on average by one Bank per month. The most active centers of banking activity in Ukraine are highlighted. A detailed analysis of banking activity is shown with the calculation of the Herfindahl-Hirschman index, which in turn allowed us to determine the level of concentration of banking activity in Ukraine.
Conclusions. It is determined that an excessively high share of the state in the banking system’s own capital may have a negative result, because such growth in the crisis near to excessive capitalization may lead to disorganization in the management of all state-owned banks over the next years. It was determined that instead of dozens of closed banking institutions a new generation of Ukrainian banks will come, which actively implement a policy of innovation and will position themselves as credible institutions with foreign investments and stabilization of the national currency and the slowdown in inflation will be factors that will help to realize the realities of the current economy. In addition, it was found that the confidence among the population about the activities of the banking sector in Ukraine still leaves much to be desired. Based on the research, the results analysis of the assessment of the financial stability index was carried out and a number of recommendations were proposed to reduce the effect of concentration of banking activities.
Keywords: concentration, banking system, Herfindahl-Hirschman index, banking sector.
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The article was received 01.03.2020