Balance Between Risk And Profit In The Context Of Strategic Management: The Example Of Ukrainian Banks
The article explores the issues of strategic management of banks, the formation of long-term strategic goals, in particular – the construction of an effective financial strategy of the bank aimed at finding a balance between the need for risk minimization and profit maximization. Balanced risk and r...
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| Format: | Article |
| Language: | English |
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The Academic Research and Publishing UG (i. G.) (AR&P) LLC
2020-04-01
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| Series: | SocioEconomic Challenges |
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| Online Access: | https://armgpublishing.com/wp-content/uploads/2020/04/9-3.pdf |
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| author | Tatiana Goncharenko Liliana Lopa |
| author_facet | Tatiana Goncharenko Liliana Lopa |
| author_sort | Tatiana Goncharenko |
| collection | DOAJ |
| description | The article explores the issues of strategic management of banks, the formation of long-term strategic goals, in particular – the construction of an effective financial strategy of the bank aimed at finding a balance between the need for risk minimization and profit maximization. Balanced risk and return management should protect economic entities from potential income shortfalls or a reduction in the market value of capital due to adverse effects of external or internal factors, from losses that can be both direct (loss of income or capital) and indirect (investment). the ability to achieve your business goals). The article presents the author’s own approach to the calculation of the taxonomic method of the bank’s integrated risk and profitability indicators, as well as the results of matrix analysis, which made it possible to trace the bank’s risk / profit ratio. All Ukrainian banks are selected as the subject of study, and the first three quarters of 2018 are the time horizon. Economic norms and limits of open currency position on regulation of banking activity by the National Bank of Ukraine were selected to assess the level of riskiness of the bank, and the main indicators of bank profitability (total level, cost recovery, return on assets, total capital, net interest margin) were selected for profitability level. The study empirically confirms that risk management in Ukrainian banks is at a critical level and profit management is at medium and low levels. Basically, banks are characterized by a focus on profit maximization, eliminating high risk activity. The risk-reward strategy is chosen by a small number of Ukrainian banks and profit maximization is rare enough for Ukrainian banks. |
| format | Article |
| id | doaj-art-3dafc92302244206b8364e2584be089b |
| institution | DOAJ |
| issn | 2520-6621 2520-6214 |
| language | English |
| publishDate | 2020-04-01 |
| publisher | The Academic Research and Publishing UG (i. G.) (AR&P) LLC |
| record_format | Article |
| series | SocioEconomic Challenges |
| spelling | doaj-art-3dafc92302244206b8364e2584be089b2025-08-20T03:13:11ZengThe Academic Research and Publishing UG (i. G.) (AR&P) LLCSocioEconomic Challenges2520-66212520-62142020-04-014111112110.21272/sec.4(1).111-121.2020Balance Between Risk And Profit In The Context Of Strategic Management: The Example Of Ukrainian BanksTatiana Goncharenko0https://orcid.org/0000-0001-6298-4517Liliana Lopa1https://orcid.org/0000-0002-1806-6038PhD, Director of Sumy College of Economics and Trade, Sumy College of Economics and Trade, UkrainePhD Candidate, Department of Finance and Entrepreneurship, Sumy State University, UkraineThe article explores the issues of strategic management of banks, the formation of long-term strategic goals, in particular – the construction of an effective financial strategy of the bank aimed at finding a balance between the need for risk minimization and profit maximization. Balanced risk and return management should protect economic entities from potential income shortfalls or a reduction in the market value of capital due to adverse effects of external or internal factors, from losses that can be both direct (loss of income or capital) and indirect (investment). the ability to achieve your business goals). The article presents the author’s own approach to the calculation of the taxonomic method of the bank’s integrated risk and profitability indicators, as well as the results of matrix analysis, which made it possible to trace the bank’s risk / profit ratio. All Ukrainian banks are selected as the subject of study, and the first three quarters of 2018 are the time horizon. Economic norms and limits of open currency position on regulation of banking activity by the National Bank of Ukraine were selected to assess the level of riskiness of the bank, and the main indicators of bank profitability (total level, cost recovery, return on assets, total capital, net interest margin) were selected for profitability level. The study empirically confirms that risk management in Ukrainian banks is at a critical level and profit management is at medium and low levels. Basically, banks are characterized by a focus on profit maximization, eliminating high risk activity. The risk-reward strategy is chosen by a small number of Ukrainian banks and profit maximization is rare enough for Ukrainian banks.https://armgpublishing.com/wp-content/uploads/2020/04/9-3.pdfstrategybankstrategic managementrisk managementprofit managementtaxonomic analysismatrix analysis |
| spellingShingle | Tatiana Goncharenko Liliana Lopa Balance Between Risk And Profit In The Context Of Strategic Management: The Example Of Ukrainian Banks SocioEconomic Challenges strategy bank strategic management risk management profit management taxonomic analysis matrix analysis |
| title | Balance Between Risk And Profit In The Context Of Strategic Management: The Example Of Ukrainian Banks |
| title_full | Balance Between Risk And Profit In The Context Of Strategic Management: The Example Of Ukrainian Banks |
| title_fullStr | Balance Between Risk And Profit In The Context Of Strategic Management: The Example Of Ukrainian Banks |
| title_full_unstemmed | Balance Between Risk And Profit In The Context Of Strategic Management: The Example Of Ukrainian Banks |
| title_short | Balance Between Risk And Profit In The Context Of Strategic Management: The Example Of Ukrainian Banks |
| title_sort | balance between risk and profit in the context of strategic management the example of ukrainian banks |
| topic | strategy bank strategic management risk management profit management taxonomic analysis matrix analysis |
| url | https://armgpublishing.com/wp-content/uploads/2020/04/9-3.pdf |
| work_keys_str_mv | AT tatianagoncharenko balancebetweenriskandprofitinthecontextofstrategicmanagementtheexampleofukrainianbanks AT lilianalopa balancebetweenriskandprofitinthecontextofstrategicmanagementtheexampleofukrainianbanks |