Volume 03 Issue 05-2023
126
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
05
Pages:
126-130
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
A
BSTRACT
The continuous development of the banking system in our republic is an objective necessity in the
conditions of market relations, which, in turn, requires the improvement of the methodological
foundations of the creation of the database necessary for the continuous control of the activity and financial
stability of commercial banks and their effective management.
K
EYWORDS
Banking system, financial stability, state, control, money, capital, financial system, review of financial
stability.
I
NTRODUCTION
In modern conditions, the task of ensuring the
interests of its shareholders, employees,
depositors and creditors and at the same time
fulfilling the requirements set by the state control
bodies in relation to banking policy, as well as
credit and investment operations, creates certain
difficulties for banks. he says. Due to the increase
in the number of banking organizations in recent
years, they are forced to enter the local and global
money and capital markets. In many cases, even
the growth of deposits attracted from the local
market cannot fully satisfy the demand of
customers for loans and new services. Access to
the capital and money market to attract funds
Journal
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Copyright:
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Research Article
THEORETICAL BASIS OF MANAGEMENT OF THE FINANCIAL
STABILITY OF THE BANKING SYSTEM
Submission Date:
May 20, 2023,
Accepted Date:
May 25, 2023,
Published Date:
May 30, 2023
Crossref doi:
https://doi.org/10.37547/ijasr-03-05-20
Umirova Gulmira
Jizzakh Polytechnic Institute Assistant Of The Department Of Economics And Management, Uzbekistan
Volume 03 Issue 05-2023
127
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
05
Pages:
126-130
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
requires a thorough study of bank statements by
investors and the public. This requires the
management of the bank to intensify their work
towards achieving the set goals. As a result of the
implementation of such measures, commercial
banks achieve effective management of their
financial stability.
Financial stability is the ability of the financial
system, i.e. financial institutions, markets and
market infrastructures, to withstand possible
shocks and imbalances, while reducing the
probability of failure to perform financial
intermediation functions. The goal of financial
stability is to ensure the stability of the entire
financial system, not individual financial
institutions. Financial stability is the basis of
sustainable economic development.
The financial system is considered stable only
when banks, other credit organizations and
financial markets do not allow households and
business entities to suddenly slow down the
functioning system, and can provide the
necessary financial investments for their
participation in the economy and its growth. In an
otherwise unstable system, economic shocks can
adversely affect the real economy, derail lending
and lead to greater than expected risk, reduced
employment, and dampened economic activity.
In the conditions of financial instability, the
financial system cannot provide the necessary
financial services for the economy. For example,
difficulties in a large financial institution can
cause financial instability. In addition, problems
in one institution can spread to other
organizations of the system that are closely
interconnected due to interbank transactions.
The collective activity of institutions can create a
risk for the entire financial system, that is, a
systemic risk, which can lead to financial
instability of an individual organization that
seems to be reliable.
Financial stability and its analysis is one of the
main tasks of central banks and regulatory bodies
of the financial system. Since the banking sector is
the most important link of the financial system of
Uzbekistan, ensuring its stability is one of the
main tasks of the Central Bank of the Republic of
Uzbekistan. The Central Bank monitors and
evaluates changes in the banking system, as well
as takes measures to reduce the accumulation of
systemic risks and ensure the stability of the
banking system. The Central Bank publishes a
financial stability review twice a year, which
analyzes and assesses the stability of the banking
system, macroeconomic vulnerabilities and risks.
The main goal of publishing this review is to
increase public awareness and transparency and
accountability of the Central Bank in this area.
The history of scientific research on financial
stability covers more than 1 century. Oliver M. W.
Sprague, Assistant Professor of the Faculty of
Banking and Finance of Harvard University, was
the first to analyze the stability of banks in his
monograph. The main focus of the monograph is
on the methods of formation of depositors' trust
and its consequences when this problem is not
given sufficient attention; was focused on quality
indicators and methods of gaining depositors'
trust. In general, such methods are variable in
Volume 03 Issue 05-2023
128
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
05
Pages:
126-130
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
nature, which means that it is somewhat difficult
to develop a predetermined plan and methods in
this regard. Nevertheless, over the past century,
several methods and criteria have been
developed in the science of financial stability
management, and their advanced computer-
based methods have been widely used in the last
several decades.
According to Prof. O. Lavrushin, when assessing
the financial stability of commercial banks, the
main attention should be focused on grouping
and structural analysis, only then it is possible to
make a realistic assessment of the level and
stability of the profit obtained from each group of
operations [1].
We fully agree with this conclusion of O.
Lavrushin, and in addition, the method of
comparative analysis plays an important role in
assessing the financial stability of commercial
banks. We believe that it is appropriate to
perform a comparative analysis with other banks.
It can be seen in the results of the research on
financial stability assessment methods of the
European Central Bank and the Bank of
International Accounts, which are regularly
issued, that the management methodology of
stability focuses on macroeconomic indicators.
The ECB (European Central Bank) divides
financial stability analysis tools into 3 groups:
•
to identify the sources of network outages
•
assessment of potential costs to the real
economy in severe financial stress
•
fragility of the network of financial
institutions
Also, in the minutes of the Irving Fisher
Committee, the measures developed by central
banks, the single general measures, in creating
the criteria for assessing financial stability are
mentioned in detail. According to it, economic
sectors are divided into 6 groups depending on
their nature:
1.
Real sector (Industry)
2.
Corporate network riskiness
3.
Health of the household network
4.
External sector
5.
Financial sector
6.
Financial markets
According to the definition given on the website
of the World Bank, financial stability is the
flexibility and resilience of the financial system to
financial stress. Financial instability can lead to
serious consequences such as bank failures,
hyperinflation or stock market crashes.
As mentioned above, there are several methods of
measuring stability, including z-score method,
Merton model (asset value model), KMV model,
the distance to default (The Distance to Default)
and others.
For example, the z-score method. In this method,
capitalization and risk (capital default) are
compared in order to determine the bank's
solvency risk. That is:
z ≡ (k+µ)/σ
In this,
Volume 03 Issue 05-2023
129
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
05
Pages:
126-130
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
k - capital, in the form of a percentage of assets µ
- return, in the form of a percentage of assets;
σ
-is the standard deviation of the return on
assets, in the form of the failure rate;
In our country, a number of decisions have been
developed in this regard, and necessary grounds
have been created for commercial banks to
properly resolve this issue.
Decree №. PF
-5992 dated 12.05.2020 of the
President of the Republic of Uzbekistan was
developed. According to it, it is envisaged "...to
develop detailed requirements for a reliable
system of stress tests in banks, to use its results in
planning the adequacy indicators of banks' capital
and liquidity". At the same time, the decree
stipulates the following:
The financial stability and durability of the
banking sector is the main condition for the
successful implementation of the planned
reforms and strengthening the trust of business
and the population in the national banking
system.
In order to achieve the strategic goals of
increasing the financial stability of the banking
sector, it is planned to implement the following
measures:
1) ensuring the moderation of lending growth
rates and improving the quality of the loan
portfolio;
2) improvement of banking sector control and
implementation of a modern system of risk
management in banks;
3) ensuring mutual reform of the banking system
and enterprises with a state share in the real
sector of the economy, active participation by
banks in the transformation of the activities of
state enterprises and organizations on a
commercial basis, changes in the real sector and
the financial sector in a harmonious manner
ensure passage;
4) increase the minimum requirements for banks'
capital, including taking into account the
accession of the Republic of Uzbekistan to
international economic organizations and the
integration of the republic's banking system into
the international financial system;
5) consistent development of the deposit
protection system based on the best international
experience.
Within the framework of the indicated measures,
the following will serve to strengthen the
financial stability of banks:
•
the implementation of comprehensive
measures to increase the efficiency of
management of enterprises with a state share,
including the development of the most
optimal methods of management, financial
stability
and
privatization
of
these
enterprises;
•
conducting an independent assessment of the
quality of the assets of banks with a state
share and taking measures to improve the
quality of their credit portfolios, including
through practical assistance to non-
performing loans;
Volume 03 Issue 05-2023
130
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
05
Pages:
126-130
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
•
activity of credit bureaus, including the
development of their databases by integrating
them with the information systems of the
housing and communal economy complex, tax
and pension systems;
•
international integration of the financial
sector based on the principles of introducing
advanced international standards in banking,
including corporate management and
customer service;
•
improvement of the legislation in the fields of
out-of-court
settlement
of
disputes,
bankruptcy, enforcement and other measures
of legal protection of banks against dishonest
actions of debtors.
When we talk about financial stability
management methods, we need to think about
what causes financial instability, that is, financial
stability risks. Because if there is no risk of
financial instability, there is no need to manage it.
So, we are not talking about financial stability, but
rather how to effectively manage its risks.
Two main approaches to financial instability have
been recognized for several years. These are:
―cyclical
(periodic)
and
―monetaristic
approaches.
According to Hyman Minsky and Charles
Kindleberger, the problem starts with rising asset
prices. This is known as a cyclical event. An
increase in prices does not mean that this trend
will continue later, but with this thought, the
purchase of assets in the market will increase (in
the literature, this situation is called the
"bandwagon effect"). But after some time, as a
result of an external influence, prices will drop
sharply. This has a major impact on financial
institutions, such as banks, that build their assets
mainly on borrowed funds.
R
EFERENCES
1.
Decree of the President of the Republic of
Uzbekistan No. PF-60 dated 28.01.2022.
"Development Strategy of Uzbekistan for
2022-2026".
2.
Decree №. PF
-5992 dated 12.05.2020 of the
President of the Republic of Uzbekistan
3.
3.Lavrushin O.I. Bankovskoye delo.
–
M.:
KnoRus, 2008.
–
S. 251.
4.
Abdullaev, A., Abdullaevа, G., & Umirova, G.
(2022).
СОДЕРЖАНИЕ
СТРЕСС
-
ТЕСТИРОВАНИЯ
ЭКОНОМИЧЕСКОЙ
БЕЗОПАСНОСТИ БАНКОВСКОЙ СИСТЕМЫ.
InterConf.
5.
Umirova, G.Sh. (2023). Yosh olimlar,
doktorantlar va tadqiqotchilarning onlayn
ilmiy
forumi.
RAQAMLI
IQTISODIYOT
SHAROITIDA
BANK
TIZIMINI
ISLOH
QILISHNING YO‘LLARI, 37
-38. TATUFF-EPAI.
6.
6.http://www.mineconomu.uz - Ministry of
Economy of the Republic of Uzbekistan
7.
http://www.mf.uz - Ministry of Finance of the
Republic of Uzbekistan
8.
http://www.stat.uz
-
State
Statistics
Committee of the Republic of Uzbekistan
9.
http://www.chamber.uz
–
Chamber of
Commerce and Industry
