The approaches of scientists to the definition of categories “liquidity of banks” and “regulation of the banking system’ liquidity” are investigated. A retrospective analysis of the NBU’s approaches to regulating the liquidity of the banking system was carried out and the use of two main methods used by the NBU to calculate the liquidity level of the Ukrainian banking system during the independence period was identified. Dynamic ranks of liquidity of the Ukrainian banking system and instruments of its change in 2012–2020 were constructed, stable dynamic tendencies and the main factors causing such dynamics were identified. The changes in the liquidity of the Ukrainian banking system in the periods of the financial crisis 2014–2015 are analyzed in detail, the main factors of the change in the liquidity of the Ukrainian banking system during such period are identified. It was proved that the change in approaches to the calculation of the liquidity level of the Ukrainian banking system was accompanied by the implementation of a completely new refinancing tool for banks – NBU deposit certificates. It was also proven that changing the approach to calculating the liquidity level of the Ukrainian banking system and the use of a new refinancing tool resulted in maximizing the NBU’s influence on regulating the liquidity of the Ukrainian banking system.
The crisis of excess liquidity of the banking system of Ukraine was detected, its time periods were identified, the main factors of its emergence and their quantitative characteristics were presented. The unproductive use of highly liquid assets by banks has been proved, which is caused by the processes of regulating the liquidity level of the banking system and the use of NBU certificates of deposit. A sharp change in the structure and level of liquidity of the banking system in 2020 and disruption of the transformation function of the banking system were identified. In particular, banks with significant free resources (76.24 % of banks' liquidity, which is equivalent to practically 20 % of the loan portfolio), are not able (or willing) to direct these resources to finance the real economy. Thus, a violation of the NBU’s monetary policy has been identified, which puts considerable pressure on the monetary sphere, and in the event that the NBU loses control of this process, excess liquidity of banks will cause an inflation spike. Also, the liquidity surplus in the second half of 2019 – early 2020 and the imbalance of the resource base are threatening to reduce the efficiency of banks in 2020.
The NBU’s methodology for regulating banking liquidity with the help of mandatory standards is investigated. The legislative regulation of bank liquidity is analyzed and changes in the methods of calculation of liquidity ratios are revealed. Based on the analysis of retrospective data, it has been shown that, despite changes in the mandatory liquidity standards, during 2014–2020 the liquidity indicators exceeded the regulatory values several times, but peak exceedances were detected in 2020, which confirms the emergence of the excess liquidity crisis in the banking system of Ukraine. Grouping of banks by liquidity level revealed that practically 50 % of banks are in the range of 150–300 % of the standard, and 23 % of banks are in the range of 300–500 % of the standard, while 24 % of banks are in the range of more than 500 % of the standard. Such a significant excess of the liquidity ratio indicates the ineffective financing of banks in the real sector of the economy and the lack of attractive directions for active operations, which threatens both economic growth and efficiency of the banking system in 2020.
The research develops key recommendations for banks to prevent excessive liquidity risk.
1. Carletti E. (2007). Competition and regulation in banking. Handbook of Financial Intermediation. Amsterdam: Elsevier / North Holland, рр. 449-482.
2. Ilchuk P. & Kots O. (2019). Refinancing operations: evolution of the role and identification of the influence on the ukrainian banking system liquidity. Retrieved from: https://doi.org/10.2991/smtesm-19.2019.13.
3. Ilchuk P. & Kots O. (2019). Nexus between monetary instruments and Ukrainian economy indicators. Lviv: Publisher "Novyi Svit-2000".
4. Mio H. & Banerjeea R. (2018). The impact of liquidity regulation on banks. Journal of Financial Intermediation, 35, B, рр. 30-44.
5. Tarazi A., Distinguin I. & Roulet C. (2013) Bank regulatory capital and liquidity: Evidence from US and European publicly traded banks. Journal of Banking & Finance, 37, 9, рр. 3295-3317.
6. Vozhzhov S. P. (2010). Dostupnist bankiv do refinansuvannia ta mozhlyvosti variatsiinoho rehuliuvannia yikh likvidnosti [Availability of banks for refinancing and the possibility of variational regulation of their liquidity]. Finansy Ukrainy [Finance of Ukraine], 2, рр. 111-119.
7. Infliatsiinyi zvit [Inflation report] (January 2020). Retrieved from https://bank.gov.ua/news/all/ inflyatsiyniy-zvit-sichen-2020-roku.
8. Mishchenko V. I., Somyk A. V., et al. (2008) Likvidnist bankivskoi systemy Ukrainy: Nauk.-analit. materialy [Liquidity of Ukrainian banking system: Scientific and analytical materials]. Kyiv: National Bank of Ukraine. Center for Scientific Research, р. 180.
9. Makroekonomichnyi ta monetarnyi ohliad [Macroeconomic and monetary report] (March 2020). Retrieved from: https://bank.gov.ua/news/all/makroekonomichniy-ta-monetarniy-oglyad-bere...
10. Manzhos S. (2014). Refinansuvannia yak instrument pidtrymannia likvidnosti bankivskykh ustanov Ukrainy [Refinancing as a tool for maintaining the liquidity of Ukrainian banking institutions]. Halytskyi ekonomichnyi visnyk [Galician Economic Bulletin], 3, рр. 130-138.
11. Mishchenko S. V. (2009). Problemy zabezpechennia likvidnosti bankiv na osnovi vykorystannia mekhanizmiv refinansuvannia [Problems of providing liquidity of banks based on the use of refinancing mechanisms]. Finansy Ukrainy [Finance of Ukraine], 7, рр. 75-88.
12. Ofitsiinyi sait Natsionalnoho banku Ukrainy [The official site of the National Bank of Ukraine]. Retrieved from: https://bank.gov.ua/
13. Pohorielova T. V. & Ahapchenko K. A. (2019). Statystychnyi analiz dynamiky likvidnosti komertsiinykh bankiv Ukrainy za period 2008-2018 rr. [Statistical analysis of liquidity dynamics of commercial banks of Ukraine for the period 2008-2018]. Statystyka - instrument sotsialno-ekonomichnykh doslidzhen: zbirnyk naukovykh prats [Statistics - a tool for socio-economic research: collection of scientific papers], 5, рр. 6-12.
14. Postanova Pravlinnia Natsionalnoho banku Ukrainy "Pro zaprovadzhennia koefitsiienta chystoho stabilnoho finansuvannia (NSFR)" [Resolution of the Board of the National Bank of Ukraine "On the implementation of the Net Stable Funding Ratio (NSFR)"]. Retrieved from https://bank.gov.ua/legislation/Resolution_24122019_158.
15. Postanova Pravlinnia Natsionalnoho banku Ukrainy "Pro zatverdzhennia Zmin do deiakykh normatyvnopravovykh aktiv Natsionalnoho banku Ukrainy" [Resolution of the Board of the National Bank of Ukraine "On Approval of Amendments to Some Regulations of the National Bank of Ukraine"]. Retrieved from https://zakon.rada.gov.ua/laws/show/v0102500-19.
16.Rishennia Pravlinnia Natsionalnoho banku Ukrainy "Про схвалення Методики розрахунку коефіцієнта чистого стабільного фінансування (NSFR)" [Decision of the Board of the National Bank of Ukraine "Approving the Methodology for Calculating the Net Stable Funding Ratio (NSFR)"]. Retrieved from https://bank.gov.ua/legislation/Decision_24122019_1001-rsh.
17.Rudan V. Ya. (2017). Likvidnist bankivskoi systemy Ukrainy: suchasnyi stan i stratehichni oriientyry upravlinnia [Liquidity of the banking system of Ukraine: current state and strategic management orientations]. Ekonomichnyi analiz: zbirnyk naukovykh prats TNEU [Economic analysis: collection of scientific papers of TNEU], 27, 4, рр. 170-179.
18. Khrystoforova, O. M. & Minasian, M. T. (2019). Likvidnist bankivskoi systemy ta praktychni aspekty yii zabezpechennia v suchasnykh umovakh Ukrainy [The liquidity of the banking system and practical aspects of its providing in the current conditions of Ukraine]. Naukovyi visnyk Khersonskoho derzhavnoho universytetu [Scientific Bulletin of the Kherson State University], 36, рр. 109-114.