Introduction. The rapid development of bank financial management technologies prompted by the increasing sophistication and scaling of control elements calls for harmonisation of its functions and improved analytical support. The purpose of the paper is to develop analytical tools to implement integrated bank financial management technologies, such as the balanced scorecard, benchmarking and financial controlling, which would factor in all the stages of the bank's life cycle. The study employed the following methods: logical synthesis-to form a system of performance indicators to measure the bank's financial results, customer base, business processes and human resources management; canonical analysis-to establish the cause and effect relationships between the indicators. Results. Based on the example of 27 Ukrainian banks at the intensive growth stage as a case study, the paper proves close correlation between the perspectives of the balanced scorecard: «Personnel Development»-«Business Processes»; «Business Processes»-«Customers»; «Customers»-«Finances». Conclusions. The proposed set of analytical tools allows observing the specifics of the cause and effect relationships at each stage of the bank's life cycle between its performance indicators of financial results, customer base, business processes and personnel management. It constitutes grounds for the adjustment of the bank's objectives maps with due regard to the cyclic nature of its development, as well as for the creation of mechanisms to apply the balanced scorecard, benchmarking and financial controlling technologies. It is advisable to employ indicators with the closest correlation in benchmarking for setting targets when doing financial planning (using the indicators of the reference bank for this purpose), and when realising financial controlling-to find deviations of the controlled indicators from the planned figures as well as develop recommendations to eliminate the causes of such deviations. According to the results of our research, these indicators were found: for the perspective «Finances»-the total capital adequacy ratio and the share of retail loans in assets; for the perspective «Customers»-the average liabilities per one customer and the expenditure per one customer; for the perspective «Business Processes»-the operating expenditure in the total expenditure, the revenues from new products in the bank's total revenue and the share of new products in the product line; for the perspective «Personnel Development»-the intellectual potential factor and the share of employees with higher education in the total number of personnel.
This paper presents the recommendations for selecting a kind of financial innovation in a bank based on the results of theoretical research regarding its usage as a tool for ensuring bank financial soundness. The study is aimed at developing an approach to selecting a kind of financial innovation depending on the level of bank financial soundness and the stage of bank life cycle. The existing method of identifying a bank’s life cycle stage in the framework of the developed approach was improved: it was offered to use the criteria of the growth rates of a bank’s market share, total income, staff costs and net cash flow for grouping banks by the stage of their life cycle and conduct two-steps clustering which helps to determine those banks which are on the transitional stages and to refer a bank to a similar group (growth, stabilization and decline). The empirical results of its implementation suggest that there are three groups of Ukrainian banks that vary according to the stage of bank life cycle (growth, stabilization, decline), excepting those institutions which are on the transitional stages. By the example of banks which represent the main characteristics of each cluster, the authors recommend to launch particular kinds of financial innovation in bank operating activity, taking into account the peculiarities of each group. The empirical results confirm the relevance of the developed approach and its value for identifying the current phase of a bank’s development and managing its financial soundness. Keywords: bank financial soundness, bank life cycle stage, cluster analysis, discriminant analysis, Ukraine. JEL Classification: G21, D91
According to the stages of the banking system stability monitoring, the analysis of caus¬al links is used to identify the causes of the crisis trends spreading and the rationale for the most effective levers of regulatory influence on the banking system parameters by the central bank.The research is based on the use of the canonical correlation method for structuring causal links between the indicators for the assessment of the banking system stability, which are grouped into four sub-indices (assessing the intensity of credit and financial interaction in the interbank market, the effectiveness of the banking system functions, structural changes and financial disproportions in the banking system, activities of systemically important banks); the method of regression analysis and the calculation of elasticity coefficients is also used to assess the sensitivity of the banking system stability to changes in parameters that characterize the banking regulation instruments.The article analyzes the results of quantitative and qualitative assessment of the banking system stability (comparison of actual results of the evaluation with the data for previous years and comparison of values of stability indicators with critical values). The causes of detected deviations are determined taking into account the results of applying the canonical correlations method. Regression models have been constructed to confirm the dependence of the banking system stability index on the change in parameters that characterize banking regulation instruments, and to determine the most effective of them. Practical testing of submitted proposals is realized based on the Ukrainian banking system indicators for 2007–2016.
AUTHORSVolodymyr Ponomarenko Oleh Kolodiziev http://orcid.org/0000-0002-6715-2901 Iryna Chmutova ARTICLE INFOVolodymyr Ponomarenko, Oleh Kolodiziev and Iryna Chmutova (2017). Benchmarking of bank performance using the life cycle concept and the DEA approach. Banks and Bank Systems, 12(3), 74-86. doi:10.21511/bbs.12(3) AbstractDespite the widespread use of benchmarking as an effective tool for improving the efficiency of the bank's functioning, its implementation does not take into account the relation between comparable performance indicators, the choice of benchmark for comparison, deviations of indicators from target values with stages of the bank's life cycle, which cause differences in the intensity and characteristics of development of financial institutions. The procedure for identifying a reference bank for comparison is also insufficiently specified, which is important in terms of adapting its experience by the recipient bank due to the possible fundamental differences in their functioning. Therefore, the article has modified the technology of benchmarking of the bank's performance based on the life cycle concept and the DEA approach.The research is based on the use of the DEA method to determine the most efficient bank as a reference bank in benchmarking comparison; canonical analysis -for the formation of a list of indicators of bank performance; cluster analysis -to substantiate the levels of deviations of the actual values of comparable indicators from the target ones.
The article is devoted to the formation of a methodical approach to the risk assessment of bank services use to legalize questionable income considering the influence the of FinTech innovations rapid development and their active implementation by banks. Microeconomic factors groups, which influence the bank clients' illegal incomes legalization processes are proposed. In the context of it, there were formed the measurement indicators regarding microeconomic interbank and microeconomic client factors. The assessment is proposed to be carried out in the following areas: firstly, integral assessment using questionnaires and taxonomy methods of the bank's system for prevention and counteraction of the income legalization as an environment, where money laundering appears potentially; secondly, statistic analysis regarding the dynamics of the existed indices of banking operations amounts, which have a higher risk of implementation for legalization; and thirdly, an assessment of the banks' activity in terms of FinTech innovations implementation. The results of the proposed methodological approach allow us to form a two-dimensional matrix structure, which divides banks into groups with a maximum, minimum and moderate risk of their use for money laundering. It was proved that the calculation regarding statistic features of cash turnovers dynamics and bank clients' funds on the current accounts enables to analyze the degree of unsystematic factors' influence, as one of the risk indicators to use banking services with purpose to legalize the illegal incomes, that is a base to improve the internal financial monitoring system in the Ukrainian banks. Next research will focus on the checking the hypothesis regarding the fact that more active banks from the viewpoint of FinTech innovations introduction are less vulnerable in relation to their involvement in the money laundering.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.