Indicators to Assess Financial Security of the Banks

Abstract

Ensuring liquidity and sustainability of commercial banks enables to satisfy the needs for loans extended to individuals and legal entities, as well as to provide continuity of the payments in the economy. In turn, banking liquidity and ensuring solvency are considered to be a crucial precondition for ensuring their financial security. As far as we know in the world practice there is no single approach to the financial security of banks and the system of assessment indicators. Statistic data used in various countries required to the calculation of assessment indicators vary in different countries. This, in turn, does enable to entirely assess the financial security of banks. Methodology of the study was based on modern foreign scientist`s research works. In the article was used indicators coefficients and the data provided from the Central Bank of the Republic of Uzbekistan. In this regard this article is devoted to the research of scientific-theoretical aspect of financial security. In addition, the article specifies the indicators used to assess financial security of commercial banks. The research has been conducted on the case-study of joint-stock commercial bank “Asaka” operating in our republic. Moreover, the article presents assessment of the financial security of “Asaka” JSCB, as well as determines the problems associated with ensuring financial security. In addition, the article contains scientific proposals aimed at eliminating the problems specified above. In terms of the method available, the indicators used for assessing financial security are fit for the enterprises, however, such indicators haven’t been developed for banks. In the method proposed in this article, the indicators used for assessing financial security have been structured in terms of the peculiarities of commercial banks operating in the republic.

The Impact of High Indicators of Deposits and Loans on Banking Liquidity an Applied Study in Some Banks Registered in the Iraq Stock Exchange

“…Bank loans are represented by those services provided to customers, according to which individuals and economic unities are provided with the necessary funds to carry out their various activities, provided that they undertake to pay the amount with its interest in one payment or in the form of installments, (Burkhanov , 2020)in addition to the guarantees that guarantee the recovery of the bank loan amount from the customer in the event that he stops paying. Granting bank loans is the main activity that provides revenues to commercial banks through the interest rates set by the bank on loans and thus obtaining returns that cover the interests of deposits that are granted to depositors and achieve the profit required for the continuation of the bank's work and its survival in the market.…”

“…Bank loans are considered one of the most important main functions through which the commercial bank achieves the largest percentage of its profits, and the success of the bank in recovering the principal of the loan is done through efficient management that adheres to balanced standards that are not strict or easy to achieve a degree of stability and then decrease the degrees of financial failure. Despite the guarantees required by commercial banks when granting bank loans, the level of risk is high and may result in negative effects that threaten the survival of commercial banks, (Burkhanov , 2020) so banks should secure sufficient liquidity to meet the withdrawals of depositors on the other hand to meet the needs of borrowers in a timely manner, that is, not to miss an opportunity investment without having to sell securities with large losses or borrowing at high interest rates, (Chowdhury & Zaman, 2018) and that one of the determinants of the bank's ability to fulfill its obligations is the adequacy of balances and quasi-cash, especially the secondary reserve represented in securities that are easy to sell with a minimum of losses, (Hasan, Atshan, & Abd, 2023).…”