Abstract:
In the context of escalating military and political uncertainties, a crucial component of
banking system stability is the establishment of an adequate level of resource provision
– liquidity. The research aims to analyze the transmission impact of the banking system's
liquidity and its structure on the volumes of financing for the real sector of the
economy in the second year of the war in Ukraine. In the conditions of war and the
corresponding intensification of military-political threats and uncertainties, the regulator
has made numerous complex decisions and restrictions aimed at balancing the challenges
with the current situation in financial markets.
The research found that the banking sector of Ukraine currently accumulates a significant
amount of excess liquidity and demonstrates high profitability. However, in the
conditions of war, the transmission mechanism works improperly, requiring constant
intervention from the regulator to balance the liquidity of the banking sector and state
finances, which, in turn, affects the behavior of commercial banks and changes the
structure of their asset portfolios. An analysis of the structure of active operations portfolios
of the banking, corporate, and private sectors provide grounds to assert that there
is no reason to expect a change in investment behavior from these groups in the perspective
of the next year due to the specificity of the conditions imposed by the Ministry
of Finance and the regulator. To maintain macroeconomic stability in the national economy
in the conditions of martial law it is necessary to introduce conditions to reduce
demand for foreign currency and, as an alternative, offer the preservation of savings
solvency through simplifying access to investments in government securities for households.
The low financial literacy of the population and the underdeveloped stock market
in Ukraine, as well as the more complex mechanism of purchasing government bonds
or military bonds compared to deposit services, make such investments by the population
insignificant and limited in demand.
