REGIONAL BANKS AS AN ELEMENT OF SUPPORTING THE STABILITY OF THE ECONOMY’S FINANCING

Abstract

The article analyzes the credit portfolio in terms of provisioning stages across systemically important banks that form the foundation of the country's banking system, ensuring its functioning, as well as small/regional banks that support regional economies and serve as pillars for their development. Additionally, it identifies which group of banks is more susceptible to the impact of negative external factors on their credit portfolios and examines how they are managed in contemporary conditions, illustrating how small banks become a foundation of stability for both regional and national economies. Introduction: the main problem lies in the fact that systemically important banks, while fulfilling a key role in maintaining macroeconomic stability, are often more vulnerable to external crisis factors due to the scale and complexity of their operations. In contrast, small and regional banks, oriented towards local markets, may be more flexible in adapting to changes, and therefore, the impact of external factors on their credit portfolios remains insufficiently studied. Accordingly, the primary objective of this research is to assess which group of banks - large or small - has greater credit portfolio stability and capacity to adapt to adverse external influences. Methods: The study employs a comparative analysis of the credit portfolios of systemically important and small regional banks, focusing on provisioning stages. The main attention is given to assessing the volume and structure of credit portfolios, analyzing the share of non-performing loans, and identifying factors that influence the stability of banking institutions during crises. Additionally, statistical analysis methods are applied to determine the sensitivity of credit portfolios to external economic factors. The research results present data obtained from comparing the studied bank groups, highlighting the importance of banks with smaller capital and/or credit portfolios in their credit activities during periods of adverse conditions and potential threats. Conclusion: The research findings indicate that small and regional banks are less vulnerable to negative external impacts on their credit portfolios due to their local specialization and less risky credit management strategies. Compared to large banks, they demonstrate greater resilience during periods of economic turbulence and play a crucial role in maintaining financial stability at the regional level. Systemically important banks, despite having larger credit portfolios, are more prone to risks due to their high level of exposure to external factors.