Page 94 - Azerbaijan State University of Economics

CONTRIBUTION OF BANKING SYSTEM INTO FINANCIAL STABILITY OF UKRAINE

[1985: 3-26]. The starting point in principal-agent theory was assumption that

agents’ relationships appear on background of balance in their interests and risk
perception by participants. With that in some cases conflict of interests between

principal and agent may occur given that their goals are different. Agent is

interested in minimization of costs connected with risk, while principal wants to
be sure that agent fulfills contract terms duly, and also minimizes costs of risk.

This principal-agent problem, also known as “agency dilemma”, can be
decomposed into two parts: problem of development of mutually beneficial

relationships and problem of risk redistribution among parties.
Considering special status of banks as financial agents, society and state

face essential challenge to match banks’ commercial interests with social interests

with regard to financial stability provision. On one hand, to solve this problem it is
important for banking system to have a number of features that will enable them

to facilitate financial stability protection from threats and will increase their

weight in financial system. On the other hand, development of regulative
background and incentives for banks to stimulate them offset financial threats, is

also of great importance.
Let’s pay attention to first option in solving agency dilemma –

implementation of targeted qualities of banking system, which would help to
protect financial system from adverse pressure. Based on analysis of

quantitative parameters of banking system (see table 1.1) we can conclude that

banking system of Ukraine has so far reached stable development stage in terms
of its participants: the number of banks in Ukraine remains stable during last

several years.
Banking system of Ukraine became attractive for foreign investors, what

is proven by presence of foreign banks and their rep offices in Ukraine. As of
April 1, 2012 there were 176 banks (JSCs) with NBU license, including 53 banks

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