Factors Affecting Profitability of Commercial Banks and Directions of its Improvement

Abstract

The aim of the article is to analyze the financial results of commercial banks of Ukraine at the present stage and develop recommendations for ensuring the profitability of their activities. The article analyzes the profitability of commercial banks of Ukraine for 2009-2017. In the paper, there proposed a mechanism for ensuring interaction of bank deposits and indicators of volatility and liquidity, which can change financial costs of banks. The higher the cost of access to alternative liquidity is, the higher the propensity of banks to increase the rates on long-term loan, which, as a result, helps to shorten the period of loan repayment and leads to making less long-term investments and production. It is revealed that one of the several institutional reasons for the lack of long-term finance and investment is the absence of functioning liquidity markets. Further research in the area of increasing profitability of commercial banks and developing the national economy will allow extend the range of results and ensure the further development of management of the optimal profitability policy of commercial banks.

Keywords

• income
• loan
• deposit
• liquidity
• volatility