Problemi Ekonomiki (Dec 2023)
Development of Consumer Lending in Ukraine: An Analysis Using the Methodology of System Dynamics
Abstract
Consumer lending in Ukraine began to develop actively in the early 2000s. During this period, there were several stages of transformation of the lending market, each of them gave rise to certain problems and brought the system to a new level of development. The system-dynamic model, presented in our work, reflects the consumer lending market of Ukraine as an interaction of subsystems and a number of external and internal factors, in which the dynamics of lending is determined by 5 key factors: the policy of the central bank (CB), gross domestic product (GDP), the share of FinTech companies as competitors in the lending market, the yield of government bonds, which are an alternative to granting a loan, as well as the rigidity of risk management. The aim of the article is to apply this model to analyze the consumer lending market in Ukraine at each stage of its development; identification of factors that have a key impact on its dynamics; analysis of specific features of their manifestation on the basis of the built system-dynamic model. For each of the stages, a system-dynamic model was applied and the manifestation of factors and their intensity were outlined. The carried out analysis showed the following features: • the first stage – rapid GDP growth and high risk appetite of banks causes significant demand and supply for consumer loans; • the second stage is a change in the rigidity of risk management: from the cessation of lending at the time of the crisis to the active increase of loan portfolios by banks in 2012-2013, which is fully in line with Minsky’s theory. A positive role in this was also played by high interest rates on loans, which increased the interest income of banks; • the third stage is the emergence of FinTech lenders that take market share from banks, as well as the impact of the NBU discount rate on the demand for loans. • the fourth stage – a significant increase in lending risks forces banks to tighten risk management and makes investments in government bonds more attractive. An analysis of the application of the system-dynamic model to genesis allows us to determine certain regularities. The assumptions about the manifestation of factors and their intensity can be used to substantiate scenarios for the development of the system.
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