Assessment and regulation of banking competition in the context of systemic transformations

Abstract

The paper's aim is to study the features of competition in the national banking system, evaluate the current state and determine the directions of its regulation and development.

In the process of research, methods of synthesis, logical generalization, comparative analysis, statistical methods, and the method of graphic visualization were used.

The article examines the essence of the category of banking competition. It is shown that competition is a basic prerequisite for the functioning of economic systems, including the banking one. It is emphasized that there are specific features of banking competition, which fundamentally distinguishes it from competition in commodity markets. Despite these differences, the main indicators of banking competition are the number of market participants and the share of each participant in the market. The main quantitative indicators of the national banking system for 2013-2025 are analysed. It is proven that despite a significant decrease in the number of participants, the growth of the system's assets occurred at an outpacing pace, which gives grounds to identify the analysed processes as the clearing of the banking system. Additionally a trend of changes in the structure of the banking system's assets was identified.

Quantitative indicators of banks of different forms of ownership (state, private and foreign) were analysed: assets, capital, liabilities and market share, which became the basis for further analysis. To assess the level of competition in the banking market of Ukraine, specific indicators were used - the Herfindahl-Hirschman index and the Concentration ratio. The mechanism of their calculation and interpretation of the obtained data is described. It is calculated that the three leading banks control over 64% of the market, and five - almost 79%. The obtained values ​​of the Herfindahl–Hirschman Index (2097.37) allow us to interpret the national banking market as an oligopoly. It is emphasized that the main core of the market is formed by state-owned banks that limit competition.

In the course of further analysis, the market shares of the leading banks in dynamics were analysed. It is convincingly proven that the situation of excessive concentration of assets in several leading banks is not accidental, but a natural and established trend. A positive trend is revealed: during the analysed period, the concentration coefficients calculated for the three and five largest banks decreased by approximately 10%.

The reasons for the excessive prevalence of state-owned banks are analysed and general vectors of efforts to increase the competitiveness of the banking market are formulated.