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In the context of the rapidly changing geopolitical situation and sanctions pressure on the Russian economy, it is critically important to assess the financial stability of enterprises, forecast the risks of decline in their financial solvency and the probability of bankruptcy in order to make effective management decisions on the development of economic sectors in the constituent entities of the Russian Federation. Currently existing methodological approaches to analyzing the probability of enterprise bankruptcy do not allow to fully assess the financial condition of economic sectors in the regions of Russia. The purpose of the work is to identify the advantages and disadvantages of the methods used in practice to analyze the financial solvency of enterprises and their adjustment to forecast the probability of bankruptcy of enterprises in the constituent entities of the Russian Federation. The novelty of the developed methodological approach is the use of multidimensional discriminant analysis of the probability of bankruptcy of enterprises in a specific sector of the economy in a constituent entity of the Russian Federation according to the modified Altman model, which eliminates the factor characterizing the ratio of the market value of shares of all enterprises in the industry to the sum of all liabilities, as well as the calculation of integral values of the probability of bankruptcy of enterprises in the industry with a breakdown into large, medium and small enterprises to study the scale of threats to financial solvency, taking into account industry specifics. In the course of the research the following results were obtained: an original methodological apparatus for assessing the probability of bankruptcy of enterprises in various sectors of the economy was developed, including the calculation of individual threshold values for each sector in the region based on the dynamics observed over a long period of time; zones of probability of bankruptcy of enterprises were determined. The resulting methodology was tested at enterprises of water supply, wastewater disposal, waste collection and utilization and pollution elimination in the Sverdlovsk region. The analysis of their financial condition revealed an increased probability of their bankruptcy. Moreover, the most vulnerable were both the largest and small enterprises which have insufficient liquidity of assets, lack of working capital and developing mainly at the expense of borrowed funds and attracted loans. As a result of the study, not only the insufficient level of financial stability and solvency of water supply, wastewater disposal, waste collection and utilization and pollution control enterprises in the Sverdlovsk region, but also a decreasing in the level of asset turnover and especially accounts receivable, as well as a high level of their debt load, were identified/designated (as the first/main signs of the threat of bankruptcy). The methodology modified by the authors allows to timely determine the probability of bankruptcy for all enterprises (large, medium, and small) taking into account the industry specifics and to initiate appropriate measures to prevent the critical financial condition of enterprises.

The need to apply the requirements of the Basel III agreement in order to improve the performance of the banking system in the country and reduce the effects of the risks facing this sector, prompted this study to investigate the level of implementation of the Basel III guidelines and their effect on the performance of the banking system in Iran. In this regard, this research using the information obtained from the annual financial statements of 16 sample banks, including Bank Ekhtaz Novin, Parsian, Tejarat, Sina, Saderat, Kerebehan, Mellat, Post Bank, Saman, Pasargad, Day, Shahr, Tourism, Capital , the future and the Middle East for the annual period from 2013 to 2021 studies the state of the banking system in Iran. This research uses DID models to carry out the aforementioned investigation. Empirical findings showed that in the presence of the requirement of stable net investment ratio, bank size has a positive effect on the bank stability index. This is also true for the ratio of cash to property. However, the effect of net profit-to-equity ratio and liquidity (liquidity) on bank stability is negative, assuming the At the level of 5% effect of bank size, net interest to equity ratio, cash to asset balance, liquidity and capital flight under the conditions of 8% capital ratio requirement have a significant effect on the stability of the banks under the conditions of applying the 8% capital ratio requirement.requirement of stable net investment ratio.

Purpose – To examine the relationship between the term structure of interest rates of sovereign bonds in emerging nations and their macroeconomic indicators, specifically emphasizing its persistence and interaction with inflation, foreign exchange and fiscal conditions. Design/methodology/approach – Adopting the Mean Group Instrumental Variables (MGIV) technique, as proposed by Cui et al. (2020) and Norkute et al. (2021), this study analyzes a monthly panel dataset from nine emerging economies spanning January 2010 to October 2021, totaling 1,278 observations. Findings – The findings reveal significant persistence in both slope and curvature, with a rising yield level linked to the term structure's flattening, while shifts in inflation and exchange rates correlate with its steepening. Originality/value – Our study is among the few which used an empirically constructed measure of the term structure of interest instead of a theoretical construct. To best our knowledge, we are the first to employ MGIV.

The aim of this study is to provide a suitable empirical framework for the interaction between Islamic finance, financial stability, and economic development. Additionally, it is an attempt to empirically evaluate how the levels of financial system stability and economic growth in an oil-rich nation are affected by the financing provided by Islamic banks. The study employs the fully modified ordinary least squares (FMOLS) and quantile regression (QR) based on quarterly data from 2013 to 2022. The findings indicate strong evidence that Islamic banking finance supports economic growth and improves financial system stability. Moreover, the study highlights that this positive relationship is negatively affected by inflation rates and levels of economic policy uncertainty. Financial inclusion has an important positive impact on both dependent variables, reinforcing this link. Furthermore, oil rents in Saudi Arabia (KSA) have contributed to improving economic development and supporting the financial sector’s development to achieve economic diversification as outlined in the Saudi Vision 2030. These findings confirm the necessity of paying attention to developing Islamic banking and increasing its market share by creating products and services that achieve economic efficiency in accordance with suitable policies for making the financial sector a strategic sector that supports economic development in KSA. AcknowledgmentThis work was supported and funded by the Deanship of Scientific Research at Imam Mohammad Ibn Saud Islamic University (IMSIU) (grant number IMSIU-RPP2023024).

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The article is devoted to the study of trends in the development of non-bank financial intermediation. The scale of the non-banking segment of the financial market has increased significantly, and it is believed that at the beginning of 2022 it accounted for about half of global financial assets, which may affect the financial stability not only of individual states, but also of the entire global economy. In this regard, the analysis of risks emanating from non-bank financial intermediation institutions is an urgent task of national financial regulatory authorities. The present study is aimed at solving this problem. The purpose of the study is to identify the impact of non-bank financial intermediation on the banking sector in order to determine the prospects for its anti-crisis regulation and develop approaches to the formation of strategies for managing systemic risks that may be caused by the activities of such institutions. The study is based on data from the Financial Stability Board, the International Monetary Fund, and the Bank of Russia. Methods of analyzing regulatory documents and comparative economic analysis are used. The paper systematizes possible channels for the implementation of risk factors and develops new approaches for the diagnosis of systemic risks due to the influence of non-bank financial institutions. There are suggestions made regarding the formulation of systemic strategies for risk management: strengthen regulation and supervision of NBFP institutions; provide conditions for providing liquidity in case of stress in the NBFP sector; ensure coordination between the Central Bank and sectoral regulators in order to manage crisis situations. Possible tools for setting up macroprudential policy to control risk factors of certain groups of non-banking financial institutions in order to ensure the stability of financial markets are presented: limitations of interrelationships with the banking system; indicators of sensitivity to customer panics; improving the quality of risk assessment; prohibition of secondary and tertiary securitizations of assets. It is concluded that there is a need for national authorities to apply 4 main approaches to regulation, primarily aimed at reducing liquidity risks, financial leverage, currency gaps and interconnectedness.

Capital inflows could thwart monetary policies by stimulating reckless lending and asset bubbles, resulting in financial instability. This study examines the effect of inward capital flows on financial stability in Nigeria, spanning over 2003 to 2019. The hypotheses were tested using Error Correction Mechanism (ECM). The findings indicate that the short runs deviations will adjust to their long-run equilibrium by 10.9 % quarterly. The findings show that inward FDI and inward portfolio investment have a positive effect on Nigeria’s financial stability, while other capital flows do not have a significant effect on Nigeria’s financial stability. Also, the analysis shows that controlling for macroeconomic factors such as GDP and inflation rate significantly affects Nigeria’s financial stability. Based on the findings, the study recommends that monetary authorities need to adopt and promote economic policies to increase FDI and entice portfolio investment with rewards such as better economic freedom and lower taxation to boost the country’s economy.

The development of the insurance market is accompanied by unstable transitional processes that can create threats and risks of worsening the insurer's financial condition. In this regard, an urgent issue is the comprehensive diagnosis of the economic indicators of the activity of insurance companies to ensure their financial security. The insurer's financial security is a set of measures to eliminate the threats of deterioration of the financial condition to achieve an acceptable level of activity risk during a certain period and ensure the insurer's financial stability before the increase of external and internal threats affecting the financial condition. Threats include factors and processes that can negatively affect the interests of owners and clients and the insurer's financial condition. Therefore, indicators of the insurer's financial security are the most significant financial indicators and parameters (factors) that characterize the insurer's financial condition and financial stability concerning parameter changes (factors). The article aims to develop a methodology for comprehensive diagnostics of insurance companies' economic indicators to ensure financial security. The research methodology is based on the use of insurers' microeconomic indicators. The author's proposals are based on two groups of indicators used in financial analysis: 1) indicators of financial condition and 2) indicators of financial stability and security. Each group comprises 7-8 financial indicators, corresponding criteria, and normative values. It is proposed that diagnostics be carried out in two stages. In the first stage, the financial condition is determined according to the indicators of the first group, and then – in the second stage, it is detailed by analyzing the indicators of financial security (indicators of the second group). The application of the approach presented in the article makes it possible to carry out purposeful work on the diagnosis of economic indicators of activity, to form an independent opinion not only about the insurer's financial condition but also to build the fundamental foundations of ensuring its financial security. It is crucial not only to calculate and compare the dynamics of indicators of the financial condition of insurers but also to assess the degree of their readiness to counter threats correctly.

Financial stability is one of the key conditions for sustainable economic development of the country. The banking system plays an important role in ensuring financial stability and development of economic structures. However, banking activities are associated with certain risks that may negatively affect financial stability and economic development. The analysis of banking risks in the context of financial stability and development of economic structures in Ukraine is an urgent issue for research. The article is devoted to the analysis of banking risks in the context of financial stability and development of economic structures in Ukraine. The importance of the stability of the banking system for the country's economy is noted, and it is emphasized that the analysis of the financial condition and risks is a key element of the management of a banking institution. The article highlights the results of research by domestic scientists on banking risks and considers the classification of risks according to the methodology of the National Bank of Ukraine. The main focus is on credit risk, which is considered in the context of changes in the economy, the use of credit in enterprises and households, global financial markets and modern technologies for its assessment and management. The article aims to emphasize the importance of credit risk analysis in the context of modern challenges and opportunities in the banking sector of Ukraine.

The relevance of the issue of mutual influence of the goals and instruments of financial and monetary policy increases during periods of economic instability. External and internal macroeconomic shocks can undermine the financial stability of the state and have a negative impact on both price and financial stability. In this regard, there is a need to adjust both financial and monetary policies based on harmonization of the instruments of financial and monetary regulation. The purpose of this study is to develop the theoretical, methodological and applied foundations for coordinating the goals and instruments of monetary and financial policies. The article concludes with the results obtained in the course of the research.

This paper examines the academic research on climate transition risk. The objective of this study is to provide descriptive characteristics of research trends in the field of climate transition risk and make recommendations based on major bibliometric data such as authors, journals, citation figures, methodology, geographical focus and author’s location. The systematic literature review methodology was used to obtain information on publications and intellectual structure related to climate transition risk from the Scopus bibliographic database until November 2023. A search strategy was developed to screen the title for eligibility, using the abstract and full text where needed. The review showed that annual evolution has increased significantly in recent years. Findings revealed a marked European and Chinese dominance with little contribution from Global South in this research field with limited contributions from Global South in terms of focus and authors and organizations contributions. The predominant data source is data-set indices, with limited methodological diversity in climate transition risk research. Findings also showed that authors from universities, research institutes and central banks are contributing to climate transition risk literature. The main themes in climate transition risk research are banking, climate policy, stock market, and asset price and performance. The impacts of climate change on interconnectedness, systemic risk and financial stability were widely covered in overlapping publications.

Abstract This study explores the complex relationships involving ecological footprints, energy use, carbon emissions, governance efficiency, economic prosperity, and financial stability in South Asian nations spanning the period from 2000 to 2022. Employing various methodologies such as cross-sectional dependence tests, co-integration analysis, and first- and second-generation unit-root tests, we use a panel Autoregressive Distributed Lag model, feasible generalized least squares, and Panel Corrected Standard Errors to ensure the robustness of our findings. We find noteworthy positive correlations between several variables, including heightened ecological consciousness, effective governance structures, increased GDP per capita, and amplified CO2 emissions. These relationships suggest potential pathways to strengthen the financial stability of the entire region; they also highlight the latent potential of embracing ecologically sustainable practices to fortify economic resilience. Our results also underscore the pivotal role of appropriate governance structures and higher income levels in bolstering financial stability in South Asian countries. Interestingly, we also find negative coefficients associated with the use of renewable energy, suggesting that escalating the adoption of renewable energy could create financial instability. This finding stresses the importance of diversification in energy strategies, cautioning policymakers to carefully consider the financial ramifications of potentially costly imports of renewable energy sources while seeking to reduce carbon emissions, emphasizing the need to strike a balance between ambitious sustainability goals and the pursuit of sustained economic robustness in the region. In considering the implications of these findings, it is crucial to consider each country’s broader socioeconomic context. Our results offer valuable insights for policymakers in developing renewable energy strategies.

Abstract This study evaluates whether exchange traded funds (ETFs) threaten financial market stability by testing two hypotheses relating the growing importance of ETFs to increased market volatility and rising equity valuations. We estimate quantile cointegration models using Standard & Poor's 500 Index (S&P 500) and Chicago Board Options Exchange volatility Index (VIX) data for 1994–2020. We found that an increase in ETFs is positively and significantly related to the long-term valuation of the S&P 500 for quantile values above the median. By contrast, ETFs have only a negative and significant effect on the VIX for quantiles around the median. Ultimately, two novel results were obtained. First, the distortion in the value of the S&P 500 relative to its fundamentals is driven by investor flow into ETFs during a bull market. Second, the impact of equity ETFs on the VIX is only affected when fundamental factors are in play, decreasing it. Therefore, ETFs contribute to forming equity bubbles and support valuation market dynamics. Both regulators and policymakers should consider these conclusions.

The article highlights the issues related to the challenges and drivers of recovery of the economy of Ukraine in the war and post-war periods. It is noted that since the beginning of the full-scale invasion of the Russian Federation on the territory of Ukraine, our country has lost significant human resources and witnessed the destruction of critical, industrial and social structures. The hostilities continue, but the belief in victory prompts scholars and practitioners to discuss the formats of reconstruction and modernization of the country after the war. Directions of economic recovery are proposed, namely: reconstruction and restoration of war-damaged property and infrastructure; quick recovery of economic processes; return of refugees and internally displaced persons back to Ukraine and their inclusion in economic processes; creating the foundations for sustainable economic growth. It has been concluded that, in general, the recovery of the economy of Ukraine, which suffered from the war, can be a driver of the recovery of infrastructure and revival of the industrial sector, creation of new jobs and support of small and medium enterprises, reconstruction of the housing stock, restoration of social infrastructure and development of the sphere of social services, social rehabilitation of war victims and restoration of the natural environment.

The article updates the issues of ensuring financial security and stability of the entities of the small business sector in Ukraine in the conditions of critically acute instability caused by the consequences of the ongoing full-scale war. The purpose of the study is to substantiate the priorities and tools for strengthening the financial security of the small business sector of Ukraine in conditions of instability. The goal of the State policy of strengthening the financial security of the small business sector of Ukraine in the conditions of wartime and instability should be the systematic improvement of the business environment of entrepreneurial activity in the context of minimizing financial challenges and threats, improving the financial and resource provision and the financial and economic condition of small business entities, ensuring the development and capitalization of this sector of the economy. New challenges and threats to the financial security of small business entities of Ukraine in the conditions of wartime have been identified, namely, a decrease in the solvent demand of the population, a narrowing of the capacity of domestic demand for consumer goods and services and a reduction in income, an increase in the cost of resources, an increase in the cost price and a decrease in the level of economic profitability, difficulties with logistics and transportation of goods, etc. It has been proven that the achievement of this goal will be facilitated by the implementation of a system of strategic priorities, namely: improving the financial and credit support of small businesses; formation of a system of investment support for development projects of small business entities; expansion of monetary and lending opportunities; de-shadowing of the capital of small business entities and restructuring of their debt obligations; small business effectivization through the growth of the sector of innovative and technologically active entrepreneurship; implementing the potential of the insurance sector in mitigating the financial risks of small business entities.

The Russian airline market for the first time since the sharp decline in passenger traffic in 2020 showed growth rates of revenue per passenger-kilometre in 2021. This indicates a step towards recovery after the biggest crisis the industry has seen in all of history. The purpose of the study is to assess the financial stability of the Russian air carriers for the last three years: 2019 (pre-COVID-19), 2020 (COVID-19) and 2021 (post-COVID-19), with the help of applying bankruptcy likelihood prediction models. The analysis was conducted for 4 airlines, each of them having a different business model that they follow (national flag carrier, low-cost carrier, ultra-low-cost carrier and regional carrier). The market positions of each airline were identified, highlighting the rapid growth of low-cost carriers, even during the COVID-19 crisis. The same cannot be said for full-service airlines, which have fallen the most in both profit and traffic. Calculations of bankruptcy models showed that low-cost airlines were more financially stable during the COVID-19 pandemic, while full-service air carriers experienced uncertainty during 2020 and only gradually recovered in 2021. These results coincide with other research regarding which business model is less vulnerable during crises, however this is very dependent on the region in which airlines operate in: both low-cost carriers and full-services airlines, according to other authors, show high financial sustainability. Such contradiction in the current research highlights the relevance of further analysis in this area to provide answers that are more concrete.

The paper examined the influence of leverage and capital adequacy on fintech's financial stability in Indonesia. We utilize both quantitative and qualitative methods. The findings showed that leverage significantly constrained the financial stability of the fintech industry in the short run. Contrarily, capital adequacy has no significant effect on financial stability. Specifically, the qualitative results indicated that a high liability-to-asset ratio depressed the financial stability of the fintech industry. However, the influence of the asset-to-equity ratio on financial stability depends on asset quality, liquidity, and riskiness. Furthermore, the respondents noted the insufficiency of capital requirements in the fintech industry. Thus, fintech firms should focus on asset quality, while regulators should tighten capital regulation.

The present study examines the impact of earnings management on financial stability and reporting transparency among Shariah and Shariah-non-compliant firms in India from 2008 to 2023. The Study uses Kothari and Roychodhury models to estimate earnings management proxies. Earnings manipulation and bankruptcy of the sample firms were estimated using Beneish’s M-score and Altman’s Z-score models. The Study reveals that compared to non-Shariah firms, the Shariah-complaint firms are less prone to earnings management and bankruptcy, and it was also found that they are more transparent in reporting their results. Overall, the study confirms that more than a religious indexation, Shariah screening is effective in maintaining ethical conduct of business practices that enhance the protection of investors. The findings of this study aid managers in policy formulations, and it will be helpful for potential investors in making investment decisions based on Shariah principles.

Shadow banks or non-bank financial intermediaries (NBFIs) are facilitators of credit, especially in emerging market economies (EMEs). However, there are certain risks associated with them, such as their unchecked leverage and interconnectedness with the rest of the financial system. In light of this, the present study analyses the impact of the growth of shadow banks on the stability of the banking sector and the overall stability of the financial system. The authors further examine the effect of the growth of finance companies (a type of NBFIs) on financial stability. The study employs data of 11 EMEs (monitored by the Financial Stability Board (FSB)) for the period 2002–2020 to examine the above relationships. Panel-corrected standard errors method and Driscoll–Kray standard error estimation are deployed to conduct the analysis. The results signify that the growth of the shadow banking sector and the growth of lending to the shadow banking sector are negatively associated with the stability of the banking sector and increases the vulnerability of the financial system (overall instability). This implies that the higher the growth of the shadow banks, the higher the financial fragility. Finance companies are also found to negatively affect financial stability. These findings are validated by different estimation methods and point out the risks posed by the NBFI sector. The extant study builds a composite index (Financial Vulnerability Index (FVI)) to measure financial stability; thus, the findings contribute to the evolving literature on shadow banks.

Our aim of this paper is to determine whether inflation targeting could improve economic growth and financial stability in 35 emerging economies of which 19 inflation-targeting and 16 non-inflation-targeting countries over the 1995–2017 period. To this end, we first determine the preconditions needed to adopt the inflation targeting regime using the Qualitative Comparative Analysis method (QCA). We then construct a Financial Stability Index (FSI) for emerging markets using a Principal Components Analysis (PCA). Finally, we determine the impact of shocks on economic growth and financial stability in inflation-targeting and non-inflation-targeting countries through a Panel VAR model estimated using the GMM method. The results show that some structural and institutional preconditions, should be set up during the pre-adoption period. In addition, the results indicate that the inflation-targeting regime allows emerging countries to control their economic growth and financial stability in the event of shocks to a greater extent than non-targeting countries, although the magnitude of the shock persists only in the short run, given that economic and financial conditions return to their normal state in the long run.

Due to the rapid development of digitalization and information technology, the study of intelligent information systems (IIS) in the banking sector is becoming an urgent task. Intelligent information systems are able to optimize banking processes, increase security, improve the quality of customer service, mitigate risks, and optimize internal processes of financial stability management. The purpose of this study is to reveal the potential and impact of IIS on banking management processes; to study their capabilities. To achieve this goal, this study used an analytical approach, in particular, methods of information and morphological data analysis, as well as the method of generalization, which allowed the identification of key aspects, features, and properties of intelligent information systems of the banking sector, and to provide a generalized structure of their functioning by the relevant processes. This article generalizes a group of intelligent information systems of the banking sector (IISBS), their general features and properties, proposes an innovative architecture of financial management support, and identifies their advantages in comparison with existing intelligent systems. The study proves that intelligent information systems of the banking sector are endowed with hybrid data analytics provided by deep learning methods using self-learning algorithms; are able to assess possible risks and plan strategies for their resolution; recognize unauthorized entries and suspicious transactions; thanks to virtual assistants, are suitable for robotizing management processes; and visually present the results of analysing large amounts of data in real time. The research conducted in this paper shows that the introduction of intelligent information systems in the banking sector is of high practical value, as it provides interactivity and personalization for customers, online interaction, and support in solving problems through various communication channels

In response to the Global Financial Crisis of 2008–2009, international financial regulators tightened the regime of banking supervision in order to minimize systemic risks, strengthen banking sector resilience and ensure financial stability. Given the increased level of credit risks and the issue of liquidity in the banking sector, as well as the role of banks in promoting the dynamics of the macro-environment, the objectives of banking regulation, through their interrelationship, may conflict with one another, and the research of this phenomenon is the subject of this article. The academic literature excludes research that provides definitive evidence on whether post-crisis banking regulation reform has achieved each of the abovementioned goals, determining the relevance of our study. The scientific novelty is attributed to the principally different approach proposed by the authors in assessing the effectiveness of the post-crisis model of international banking regulation, which is based on the analysis of the interaction and contradictions of the objectives of modern regulatory policy. The purpose of the study is to identify the extent to which the objectives of the post-crisis regulatory model were achieved and to what extent regulatory efforts contribute to the reduction of systemic risks. To achieve the research objectives, the authors applied methods of statistical and comparative analysis, synthesis of factors underlying the post-crisis regulatory mechanism, systematization, generalization and forecasting. The authors analyzed the main elements of the regulatory reform, examined the dynamics of the banking sector, and assessed the impact of the reform on systemic risks and economic growth. The research results show that tighter supervisory standards strengthened bank stress resilience, reduced systemic risks, and had a limited impact on economic growth. The article concludes that the objectives of banking regulation actively interact, but do not conflict: a consistent transition to the new Basel III standards allows each objective to be achieved.

The article considers the main characteristics of the Russian Federation subjects’ reserve funds analyzes the factors of their formation and assesses their effectiveness through the lens of the regions’ countercyclical fiscal policy. In theory, reserve funds serve not only as a source of additional budgetary funds, but also as an instrument of anti-crisis policy and financial stability. In practice, the reserve funds of Russian regions are believed not to fulfill the designated tasks, although the number of relevant studies is extremely limited. The latter determines the relevance of this study. The authors establish that the regional reserve fund of the subject as a public-law entity was established only in about half of the Russian regions and in many respects their creation coincided with the recovery growth after the crisis of 2009–2010. The theoretical provisions are also consistent with the fact that on average the reserve fund is owned by the entities whose economy is more dependent on the mining industry, has greater fiscal capacity, is less subsidized and has a lower level of debt. At the same time, greater fiscal capacity or debt sustainability can hardly be considered as factors in the creation of reserve funds. A number of models are constructed to assess the effectiveness of reserve funds of Russian regions from the point of view of countercyclical fiscal policy. It is concluded that reserve funds in their current form are ineffective for smoothing regional expenditures and maintaining overall fiscal stability. Nevertheless, many questions remain in this topic, including alternative model specifications and evaluation techniques. Based on the results obtained, the directions for further research are formulated.

Abstract. The article examines the main financial management mechanisms of a commercial bank, as well as the prospect of creating a modern financial mechanism. The article analyzes the approach to the definition of the term "finances" and the focus of management on the placement of financial resources to obtain income. Emphasis is placed on the importance of productive financial relations between the bank and clients through financial management. The role of elements of planning, operational management and controlling in the creation of modern financial management methods is also considered. The stability of the banking sector largely determines the stability of the economy in general and its successful development. Therefore, the primary task of state bodies at the macro level and the management of credit organizations at the micro level should be to ensure such stability through the implementation of a rational monetary policy; assessment and monitoring of the state of the real and financial sectors of the economy; the fall of all types of risks and the acquisition of income, which multiplied aggregate costs. All this will contribute to the modernization and improvement of the quality of banking services provided to individuals and legal entities. An unreasonable and hasty policy in the field of banking business will not only lead to a decline in the financial stability of credit organizations, but will affect the economy as a whole. The article analyzes the financial management of foreign banking organizations, as a result of which the author came to the conclusion that the most important indicators in the development of a bank's financial strategy are the value of a financial organization, the level of bank capital, a certain number of active innovative projects, an increase in the range of products and services provided by banks, an increase management of external and internal risks, as well as development of an effective investment policy. As a result of the study, the relationship between effective financial management and a high level of liquidity management of the bank and the adequacy of its capital was revealed. The theoretical recommendations made by the author can be used by bank managers during the development of tactical measures aimed at increasing the financial stability of the credit organization, as well as during the clarification of the bank's development strategy in the phases of economic growth and decline in the interests of owners and other economic entities that enter into financial relations with banks.

The relevance of this study is determined by the fact that the importance of effective management of receivables for ensuring financial stability is considered. Reducing the risk of insolvency, improving liquidity, increasing current assets, strengthening trust and reputation, as well as macroeconomic impact are the key mechanisms through which effective management of receivables contributes to the financial stability of enterprises and the country as a whole. The purpose of this study was to find ways to improve work with receivables of enterprises operating in the Khmelnytskyi region of Ukraine. As a work methodology, such research tools as analysis, synthesis, and PESTEL analysis were chosen. The results of the study demonstrated that it is critically important for any enterprise to be able to efficiently record its receivables to avoid the risk of receiving tax fines and interest charges. By implementing new mechanisms for improving accounts receivable accounting, enterprises can obtain more accurate financial reporting, improve cash flow management, ensure timely payment of services and goods from customers, improve compliance with Ukrainian tax legislation, which leads to an increase in their economic efficiency. Accounting for receivables also considers the accounting of customers’ credit ratings, which gives companies an idea of the areas of development and serves as the basis for work on managing funds. Moreover, a well-established business process, from the standpoint of avoiding the appearance of debts due to the improvement of tax and accounting, can also help the government of Khmelnytskyi region to collect taxes more effectively (timely and in full) and promote the development of public infrastructure and the provision of services in the region. The significance of the obtained results lies in the potential contribution to the construction of a stronger and more stable financial system of the Khmelnytskyi region

AbstractFinancial stability is one of the main factors for a country’s economic sustainability nowadays. Financial instability has adverse effects on the economy which can lead to the financial crisis. This research tries to answer how monetary policy related to Indonesian financial stability in the short and long term, how specific the relations between its parts such as money supply, interest rate, and exchange rate to indonesian financial stability, and which one of these parts that have ways more effective to influence Indonesian financial stability. This research data use time series quarterly as quantitative data in Indonesia. By employing econometric models of error correction on quarter data that consist of the stationary stochastic process, long-run model and cointegration approach and error correction model, this model can indicate how quickly the effect of the money supply, interest rate or exchange rate is fully accepted by the financial stability in the short term. The finding of this study showed that the increase in interest rate began to be able to improve indonesian financial stability responsively in four times the period, namely an increase of one percent in interest rate could increase 0.4161 percent of financial stability in Indonesia.

Financial stability is a crucial indicator of the financial sector's health, reflecting the system's resilience or vulnerability to crises. This study investigates the impact of macroeconomic variables and financial inclusion on financial stability in Indonesia, utilizing quarterly data from the first quarter of 2012 to the fourth quarter of 2021. Employing the Vector Error Correction Model (VECM), the research examines the influences of these factors in both the short and long term. The findings reveal that macroeconomic variables and financial inclusion significantly affect financial stability in Indonesia across both time frames. Specifically, inflation emerges as a critical factor influencing financial stability in the long term, while interest rates play a pivotal role in the short term. Moreover, financial inclusion, represented by the public's use of banking products and third-party funds relative to Gross Domestic Product (GDP), impacts financial stability both in the long and short term. Conversely, financial inclusion, measured by credit to GDP, exhibits only short-term effects on financial stability. The results underscore the importance of careful consideration by the central bank when formulating monetary policy, particularly regarding interest rate adjustments, due to their immediate impact on financial system stability. Over the long term, maintaining control over inflation rates is imperative to safeguard financial stability. Furthermore, financial institutions, in their role of fostering financial inclusion by distributing credit, must balance the quality of credit with its quantity to avoid negative impacts on the financial system's stability. This study contributes valuable insights for policymakers and financial institutions aiming to bolster Indonesia's financial stability through prudent macroeconomic management and the strategic implementation of financial inclusion initiatives.

The article is aimed at deepening and systematizing the theoretical and methodological foundations of liquidity management at the macro and micro levels. The state of liquidity of the banking system of Ukraine during the war period is analyzed and the shortcomings of the practice of liquidity management of banks at the macro and micro levels are allocated. It is found that, despite a sufficient level of liquidity of domestic banks and moderate systemic liquidity risk, banks have problems with a fixed-term deposit structure, a significant liquidity surplus, increased funding costs and increased competition for business funds. The theoretical and methodological foundations of liquidity management at different levels are systematized and supplemented, taking into account the actual problems of liquidity management of domestic banks. Two structural and logical schemes of liquidity management of the bank at the micro and macro levels have been built, which contain conceptual foundations for building liquidity management (principles, methods, instruments, communication) and take into account modern regulatory requirements (central bank, Basel committee). At the micro level, the process of liquidity management and liquidity risk management is differentiated, taking into account the channels of interaction, specific methods and instruments. Methods and instrumentarium for liquidity risk management in the process of bank liquidity management have been expanded. A universal, step-by-step algorithm of liquidity management process at the micro level is proposed. The instrumentarium of liquidity monitoring at the bank level is systematized, taking into account modern practice. The conceptual foundations of liquidity management at the macro level have been supplemented, in particular: 1) management instruments have been supplemented by the indicative ones; 2) the principles have been expanded, synergy, behaviorality, controllability have been added; 3) the functions and objectives of management are adjusted taking into account crisis factors. Emphasis is placed on proper inter-level communication and coherence of strategies, policies, methodologies and procedures for managing liquidity of banks. It is determined that the regulator at the macro level should form an appropriate atmosphere for effective liquidity management at the micro level, and banks should take a responsible (taking into account system-wide goals) approach to the liquidity management. Prospects for further research in this direction are: 1) analysis of the impact of technological innovations on the process of liquidity management at the macro and micro levels; 2) study of the global context, namely the impact of systemic shocks of different jurisdictions on the liquidity of the domestic banking system.

Recently, individuals have increasingly shown interest in investing in securities as an alternative to deposits and investments in real estate. Private investors have a desire not only to save their sav-ings, but also to multiply them. The impetus for this desire was the crisis caused by the COVID-19 pandemic, because of which many companies were forced to either suspend their activities, or transfer their employees to remote operation, or reduce wages. Despite the increasing contribution of private investors to various financial instruments, the issue of protecting their interests is acute. However, the focus of protection begins with the concept of “financial literacy”. It is financial lit-eracy that is one of the components of the country’s sustainable development chain. In this regard, the purpose of the article is to assess the impact of financial literacy of an unqualified investor on his decision to purchase securities. This issue is insufficiently studied in the scientific Kazakh literature. For a more complete disclosure of the subject of the study, factors such as awareness of the stock market and the level of education of the individual are included in the circle of determinants. The practical significance of the article lies in the scientific approach to the formation of the evidence base of the issue under consideration. Within the framework of the study, null and alternative hy-potheses were put forward. Verification of the relationship between these determinants was carried out through multivariate regression analysis. One-factor analysis of variance was used to carry out the relevant calculations concerning the respondents’ questions regarding the share of income al-located for the purchase of stock market products. Additionally, a one-factor regression analysis was applied. The diversity in methodological approaches allowed a more extensive approach to the evidence base of the hypotheses put forward.

The relevance of the problems of security of the state, society, enterprise and persons for Ukraine is not in doubt. Not only external negative factors (world pandemics, military conflicts, information propaganda, manipulation of public consciousness, cyber -terrorism, uncontrolled migration flows, aggravation and challenges for business entities and society, making it possible to look for and create new methods and tools for effective management. Unfortunately, internal factors that do not contribute to the financial security of the state and business: political instability, corruption, widespread practice of tax evasion and legalization (laundering) of proceeds obtained, uneven regional economic development and others. In view of this, the issue of financial security of business entities is of particular relevance. The issues of financial security of the enterprise are devoted to the study of foreign and domestic scientists. Paying the proper scientific and methodological value of existing scientific achievements, the problems of ensuring the financial security of the enterprise in war and post-war period remain poorly studied. The purpose of the study is to analyze the financial security of enterprises and ensure it in war and post - war recovery. The following research methods were used: comparison, analysis and synthesis, induction and deduction, generalization, systematization. The financial security management system is an orderly set of interrelated elements that form a single functional integrity intended for establishing and maintaining the optimal level of financial security. The coordination of the interaction of these elements largely depends on the success and efficiency of the functioning of the financial security management system of the enterprise.

More complex activities, financial reporting, and risk aggregation of banking groups increase the relevance of research on their financial stability. The purpose of our study is to analyze the effectiveness of banking groups’ regulation in the Russian Federation and to develop proposals for its optimization. The scientific novelty includes the identification and proof of the hypothesis of the dependence of the banking groups’ financial stability on the level of the group control, as well as measures to improve the regulation of activities and financial stability of banking groups in Russia. The research methodology is based on a linear model on panel data (fixed effects models, random effects models, and pool models). The empirical base of the study includes data on the 26 largest Russian banking groups and parent credit institutions of banking groups from 2010 to 2020. A hypothesis was put forward that the financial stability of the banking group depends on the effectiveness of the regulatory control within the group. To confirm the hypothesis, the authors assessed the financial stability of banking groups using the Zscore, while the banking groups were divided into two pools depending on the level of regulatory control. As a result, this hypothesis was confirmed. For banking groups with a high level of regulatory control, a model of financial stability and the factors that have the greatest impact on it were identified. The authors suggested the following measures to improve the regulation and financial reporting of the banking groups: 1) to expand the regulatory consolidation of the reporting of banking groups to the level of accounting, which will create the basis for a complete risk assessment; 2) to clearly define approaches to formalizing the assessment and management of the forced financial support risks for the group companies; 3) to unify the disclosure by banking groups of information about risks, methods for their assessment and management, including the relationship with the business model of activity. These measures are aimed at improving the risk management of credit institutions.

The macroprudential policy of central banks plays a key role in ensuring financial stability not only at the level of individual states but also on the scale of the entire global economy. In this regard, adequate measurement of its effectiveness is an urgent task for national and supranational financial regulatory authorities. The present study is focused on solving this problem. The purpose of the study is to develop indicators and criteria for a comprehensive assessment of the effectiveness of countries’ macroprudential policies, allowing for a cross-country analysis of this effectiveness and identifying the best global practices in macroprudential regulation. The study is based on the consolidation of the market and institutional approaches to measuring financial stability, as well as on the use of normative methods and methods of comparative economic analysis. As a result of the study, new indicators for diagnosing the effectiveness of macroprudential policy have been developed. Criteria are proposed to determine the international positions of countries in terms of the level of general, market, and institutional effectiveness of the macroprudential policy. Testing of the developed indicators and criteria was carried out for 180 countries for the period 1998–2019. The developed indicators and criteria for the effectiveness of macroprudential policy differ from the existing ones in a comprehensive manner, since they take into account the stability of financial markets and financial systems at the same time. They are also more representative as they include a wider range of parameters taken into account in financial stability calculations.

A component of digital finance that has been developed with an aim to decrease the usage of cash payments and improve financial inclusion is the crypto-asset. Concerns have been raised about the preservation of financial stability, which stands in for one of the primary objectives of central banks - along with price stability - as a result of the significant growth of the market capitalization of crypto-assets, as well as the rise in the variety of crypto-assets instruments and the volatility of their prices. Operating outside of national borders, crypto-asset trading platforms could lead to a concentration of risk and a lack of business transparency. The market for crypto-assets is growing more quickly, which highlights the need for strict regulation of that sector of the market, data collection to effectively monitor transactions, as well as providing protection for consumers and investors. The safety of all partipicants, the efficient operation of the financial system, and the maintenance of financial stability should all be guaranteed by the regulation of the crypto-asset market.

The analysis of Serbia's residential real estate market is the main goal of this paper. Price movements in that part of the market affect price and financial stability equally, which are thus the main goals of most central banks. Prior to the highly contagious COVID-19 pandemic, there was a gradual increase in the number of transactions involving real estate and prices, with oscillations observed throughout the second quarter of 2020. In this paper, we will present the available databases from the Serbian residential real estate market, as well as regulations that have been in place since the 2000s. By analyzing the trajectory in the long run of the housing credit share to GDP by using a Hodrick-Prescott one-sided filter with the parameter set to 400,000 and correlation and regression analysis, the paper's concluding part will determine whether there is a price bubble in this market segment. According to the analysis, there is currently no price bubble in Serbia's residential real estate market.

Banking sector represents component of the banking system and the overall economy of the state, which a has a significant impact on the general economic environment in which all business and financial activities of economic entities are carried out, as well as all economic events that are important for the national economy. Commercial banks are facing, on the one hand, according to the management structure of the bank, and on the other hand to the state control institutions. The regulator of the banking sector, through defined instruments and legislation, strives to preserve and strengthen the stability of the banking sector, and to improve its safe, high-quality and legal operations. Absence of regulation, inadequate regulation and inadequate capacity of regulatory bodies and how they affected the situation in the banking sector as we recognize it today, i.e. in the period after the last economic crisis. State is Additionally heavy sorrow pandemic COVID -19 which is in short period caused fall economic and society activities, which are the birth of women in 2020 the first half of 2021. An attempt will be made to reduce the consequences by introducing a new, more comprehensive regulation, with uncertainty as to whether the regulatory body will be able to prevent the deepening of the crisis in the banking sector through preventive action. The Banking Agency of the Republika Srpska supervises the functioning of the banking sector Republika Srpska, as well as the general banking environment in which it is located system. The aim of the work is to analyze the impact of the crisis caused by the pandemic COVID -19 on banking sector Republic Srpska, that through quantitative indicators - the amount of total deposits/savings on the one hand, and bank placements and the quality of assets from the point of view of credit losses in the period 30.06. 2 019-30.06.2021. years, on the other. The results show that in the observed period, there is an evident increase in deposits, but also an increase in credit activities in the banking sector of the Republic of Srpska. The conclusion of the research indicates that the crisis caused by the COVID-19 pandemic did not shake confidence in the banking sector, i.e. that the changes were not so significant that they could have a decisive impact on the movements of the analyzed financial indicators during the pandemic period. The work is structured in such a way as to include both theoretical principles and concrete empirical research on the influence of supervision on strengthening the stability of the banking system.

The banking sector is an important segment of the financial system, regardless of whether it is a bank-based or market-based system. In Western Balkan countries, preserving the banking sector's stability remains a particularly important condition for achieving financial stability, considering the dominant role of the banking sector in the financial system. The absence of stability in the banking sector can negatively affect not only the stability of the financial sector, but also the economic system as a whole. Additionally, ensuring the stability of the banking sector in the Western Balkan economies is of particular importance due to the fact that the banking sector is a key source of financing economic activities in these economies. Accordingly, the aim of the research is to identify the level of stability of the banking sector in the Western Balkan countries. The research results suggest that the banking sectors of the observed countries report satisfactory and relatively uniform levels of financial stability.

The bankruptcy of Russian companies in the existing environment has become rather common. Determination of bankruptcy risk factors allows predicting the prospects for business development. The authors set the task to determine the relative influenceof individual financial and non-financial factors on the probability of a company’s bankruptcy. To study risk factors, the authors analyzed 3184 large Russian companies (with revenues of more than 2 billion rubles per year and more than 250 employees) of various industries operating from 2009 to 2020. The total number of observations is 38,208. For analysis, 30 factors were selected and divided into five groups: profitability, liquidity, turnover, financial stability and general (non-financial) factors. For the study, one of the machine learning methods was used – the random forest method. The sample consists of companies from seven industries, including manufacturing, retail, construction, electric power, mining, agricultural production, and water supply, as well as other industries, which include companies in education, healthcare, agriculture, and hospitality. The analysis was carried out both in aggregate for the entire sample without being distributed by industry, and for samples distributed by manufacturing, retail, and service industries. In the sample as a whole, the tested model in 86% of cases correctly predicted the possibility of a company going bankrupt for the period under review. This result confirmed that machine learning methods (in particular, the random forest algorithm) are highly effective in solving the problem of bankruptcy prediction for a company. Based on the data obtained, the paper concludes that profitability factors have the most significant impact on the probability of bankruptcy for manufacturing and retail companies. For service companies, it is financial stability factors. Solving the problem of determining the bankruptcy risk factors of Russian companies will ensure a reduction in the number of bankrupt enterprises, which, in turn, will contribute to the recovery and development of the national economy.

AbstractThis article aims to explore the interplay between financial stability, financial inclusion, and inclusive growth in 40 African countries during the period 2004–2020. It acknowledges that an unstable financial system has the potential to erode confidence and hinder the essence of financial inclusion in promoting inclusive growth. However, studies regarding the combined effect of financial inclusion and financial stability on inclusive growth are hard to find, especially in Africa. By examining the effects of financial inclusion on inclusive growth and the synergistic relationship between financial stability and inclusive growth, this study seeks to shed light on how these factors interact in the context of African economies. To cater for endogeneity issues, we used a two-step system generalized method of moment. Our result reveals three outcomes: First, financial inclusion promotes inclusive growth. Second, financial stability alone is less effective to enhance inclusive growth. Lastly, financial stability forms synergy with financial inclusion to further spike inclusive growth. It is recommended that policymakers should strive to enhance financial inclusion by promoting financial stability.

The aim of the research is to identify trends that set the agenda of the structural reforms of OECD countries, as well as of the organization’s partner countries, in the context of the place of financial sector reforms in it.The authors apply the following methods: content-analysis of sources, monitoring of directions and instruments of economic policy in the financial sector, analysis of approaches used by international organizations in order to determine reform priorities (benchmarking), and decomposition of the components of the financial sector reform agenda. The paper shows that the agenda of financial liberalization, formulated in the 1970s, is mostly exhausted, although a certain gap remains between countries with developed and emerging markets in terms of the financial liberalization index. Financial regulatory reforms focused on the goal of building a more resilient global financial system, formulated in the aftermath of the 2007–2009 crisis, are affecting all countries and are also ending. Reforms are now coming to the fore, focusing on areas of the structural transformation agenda such as inclusive growth and an environmental perspective.The paper concludes that the main components of financial reforms in an inclusive context are financial inclusion, financial and digital literacy. In terms of the environmental agenda, the countries are focusing on the tasks of directing financial resources to the implementation of the UN sustainable development goals, introducing ESG investment principles for financial institutions, and developing and implementing principles for issuing green financial instruments.

The main hypothesis of the paper was the thesis that banking regulation is intended to minimize the probability of financial instability, including banking crises, which have long-lasting and destructive consequences for the economy.The practical aim of this investigation is to explore the impact of banking regulation instruments on the banking crisis probability. Despite a large and growing body of literature that has investigated the role of banking regulation in ensuring financial stability, only a few of them explored the aspect of this problem we are considering, and this constitutes the scientific novelty of the research.The results confirm the effectiveness of banking regulation in predicting periods of stability in banking systems.Based on the use of bibliometric analysis with the software tool VOSviewer v.1.6.10, the main patterns in the theory of banking regulation development have been identified. To conduct an empirical analysis, the author used a database of eleven European countries from 1998 to 2017, whose banking systems had manifestations of a systemic banking crisis. Binary modeling (logit model) was used as a scientific and methodological tool for statistical research. The conducted empirical analysis declared the need to tighten banking regulations in the field of non-performing loan control since it leads to an increase in the banking crisis probability. The results of binary modeling also emphasized the importance of macroeconomic and monetary factors, the neglect of which leads to the vulnerability of banking institutions and, consequently, to banking crises.An important conclusion of the analysis is that in order to minimize systemic banking crises, it is necessary to ensure the achievement of the target parameters of the main macroeconomic indicators, expressed in terms of the optimal level of inflation and annual GDP growth. The proposed binary model can be used to further study the causes of a banking crisis, as well as methodological and empirical clarification of the role of banking regulation in the probability of its occurrence.

The article examines the theoretical foundations of financial stability and stability of a banking institution, examines the main interpretations of approaches to defining the concept of "financial stability". The relationship between the concepts of "financial stability" and "financial stability" was studied, and as a result, it was determined that ensuring the financial stability of banks is the basis of a stable banking system, a key to the success of economic transformations and macroeconomic development. Indicators of financial stability and financial stability of the bank, using JSC CB "Privatbank" were studied as the main object of the study. In order to analyze the financial stability of JSC CB "Privatbank", its financial statements were examined and the reliability coefficient was calculated; financial leverage ratio; the coefficient of participation of equity capital in the formation of assets; capital multiplier factor. The paper calculates the stability and stability indicators of the bank. For a generalized comprehensive assessment of the bank's activity, an integral indicator of the bank's financial stability was calculated using data from the financial statements for 2020-2022. As a result of the study, a methodology for assessing the financial stability and stability of the bank was determined, which takes into account the versatile aspects of the bank's activity by selecting parametric coefficients The article examines the stability of JSC KB "Privatbank" in modern conditions of risks and losses during the martial law in Ukraine. In order to study the influence of the current conditions of martial law on the stability of the bank, the calculation of the coefficients of financial stability was carried out for the period of January-September 2022. The calculation of financial stability was carried out based on the analysis of the general coefficient of stability, the coefficient of instant liquidity, the cross coefficient, the general coefficient of liquidity, the coefficient of capital protection, the coefficient of capitalization of profit. The study analyzed the stability of the bank based on the results of the calculations. In general, the indicator of the financial stability of the bank is not sufficient for stable functioning, the bank is recommended to pay attention to indicators that have an impact on the financial stability of the bank to increase stability, such as: equity, working and liquid assets, liabilities, both short-term and long-term , authorized and protected capital.

Several factors determine the stability of a financial system. The main objective of this study is, thus, to empirically examine the key drivers of financial stability in the Sub-Saharan African (SSA) economies for the period of 2000 to 2019 using a dynamic panel Generalised Method of Moments (GMM). As financial inclusion and institutional quality broadly comprise of multiple individual measures, we constructed a composite index to proxy and represent each variable, respectively, which was then used later in the regression model to assess their effect on financial stability in the sampled economies. The findings of the study indicated that the lag effect and financial inclusion are the major positive drivers of financial stability in the SSA economies. Institutional quality, financial technology adoption and global financial crises also reflected a negative impact on the stability of a financial system in the region. Other variables seem to have no impact in the region. These findings underpin the need for policy makers and regulators to formulate and adopt macroeconomic policies that include more people in the financial system and markets, so that risks are spread over a greater populous, thereby sustaining financial stability. In addition, our scholarly contribution is that we highlight the possibilities of a trade-off between financial regulation, inclusion and digitalisation versus financial stability, which is an underresearched phenomena in financial studies.

AbstractThis study aims to examine the impact of financial inclusion on financial stability across 54 African countries. Using country-level data that spans a 20-year period from 2000 to 2020, the findings suggest a positive association between the level of account penetration and financial stability. This conclusion withstands several tests of robustness performed. Furthermore, the analysis identifies income inequality, political stability and financial openness as influential factors that may condition the relationship between financial inclusion and financial stability. The implications of our findings suggest the need for increased collaboration between regulatory and supervisory agencies in African countries to promote greater financial inclusion, as policies aimed at improving financial inclusion should have the potential to enhance financial stability. It should be noted, however, that the extent to which financial inclusion should be pursued in order to achieve these goals remains an open question that requires further investigation. Future research could also explore the key barriers to financial access, as identifying these obstacles would enable policymakers to set priorities for action and allocate resources more effectively.

AbstractThe effects of board gender diversity (BGD) on financial stability of financial institutions have long been an important topic, creating a rich strand of literature that focuses extensively on banks. Meanwhile, little is known about the implications of BGD on risk in microfinance institutions (MFI). This study aims to fill this gap. Using a data sample retrieved from the MIX Market database spanning the 2009–2018 period and the random-effects estimator, we find that the proportion of female directors on the board is positively associated with financial stability of MFIs measured by the Z-score. The result is robust when using alternative measures of financial stability and BGD, and alternative estimation techniques. In addition, we document a negative relationship between BGD and risk-taking behavior of MFIs. Further, the research result favors the critical mass theory rather than tokenism. Lastly, we find that BGD links with financial stability in a monotonic instead of non-monotonic manner.

This study presents an updated risk map of the Ukrainian financial sector – an analytical tool for identifying and monitoring the buildup and materialization of systemic risks. The risk map methodology that the National Bank of Ukraine used until 2021 has been revised to ensure that risk assessment is based on reliable quantitative indicators rather than expert judgements, as well as to extend the list of risks considered. The instrument allows the stability of the financial system to be assessed across key risks, such as macroeconomic risk, the credit risks of households and non-financial corporations, capital adequacy risk, profitability risk, liquidity risk, and foreign exchange risk. We introduce indicators that capture a wide range of economic and financial vulnerabilities and group them by risks. Each risk category contains from four to seven indicators that combine both actual data and expectations. Statistical checks show that the indicators clearly signal previous crisis episodes, as well as the buildup of vulnerabilities during the research period. We find that macroeconomic risk and foreign exchange risk have the best explanatory and predictive power, while the weaker performance of other risks could result from structural changes in the banking sector over the past decades that have affected the overall risk profile of the financial sector.