Evolution of the role of state banks in the economy

Abstract

The aggravation of global challenges of economic instability, climate change and local physical destruction of infrastructure as a result of war and man-made disasters leads to a review of assessments regarding the expediency of the existence of banks with state participation. The successful experience of using them to solve large socio-economic projects in a number of countries encourages this. Based on a theoretical generalization of the methodological recommendations of scientists and specialists of international institutions and a comparative analysis of current foreign experience, the article presents a scientific rationale for the feasibility of preserving the state share in the capital of leading banking institutions in Ukraine to ensure the stability of the economy during the war and post-war recovery. It was determined that the key directions of solving these tasks with the participation of state banks should be the preservation of the financial market stability, the support of solvent demand and the solvency of small enterprises, and the implementation of large infrastructure projects. At the same time, it was noted that a significant risk of an excessive share of the state in the banking market is the restriction of competition and the deterioration of the quality of services. Due to existing preferences, state banks are prone to violating the laws of market competition. At the same time, acting not according to the laws of the market, but in line with the government’s socially oriented policy, state banks limit the self-regulatory function of the market, which determines their transitional status. The general conclusion states that at certain stages of economic cycles, banks with state participation are a necessary tool that ensures the achievement of macroeconomic goals, infrastructure reconstruction, financing of priority sectors of the economy and, thereby, increasing the country’s competitiveness on the international market. In the presence of such tasks, banks with state participation take on the role of temporarily leading institutions of the development of the transitional stage.