Balancing on the Edge: The Ukrainian Banking System under Stress

The importance of the banking system in the economy can be compared with the blood system’s importance in human life. Any disturbance can hurt substantially not only banks but also the whole economy. A number of factors, which are connected with such disturbances, result in banks’ illiquidity and insolvency. First this thesis discusses these factors. Then, this thesis includes the research on the influence of the recent financial stress in Ukraine on banking system of this country, and some other problems which characterized the Ukrainian banks’ activity. Overall this thesis demonstrates that the recent financial stress had a massive impact on the Ukrainian banking system. Finally the thesis reveals that for 1999 the Ukrainian banks do not have the possibility to improve the quality of their assets and liabilities. In other words, the Ukrainian banking system is very close to crisis.