Analyzing the Approaches to Definition of the Term of «Bank Solvency

• Published in: Bìznes ìnform (Multilingual ed.) Vol. 5; no. 508; pp. 56 - 61
• Main Authors: Marchenko, O. V., Lynova, V. D.
• Format: Journal Article
• Language: English
• Published: Research Centre of Industrial Problems of Development of NAS of Ukraine 01-05-2020
• Subjects: liquidity; solvency; solvency of bank; subject of economic activity
• ISSN: 2222-4459; 2311-116X
• DOI: 10.32983/2222-4459-2020-5-56-61

The article is aimed at researching the economic category of «bank solvency» as well as defining and generalizing scientific approaches to its understanding. A differentiation of solvency depending on the factors of influence is specified. The concept of solvency depending on the subject of economic activity is considered (on the example of the State, enterprise, banking institution, insurance company), the differences between them are researched. The essence of the term of «bank solvency» based on researches by various scholars is allocated. It is determined that the most capacious definition of the term of «solvency» is provided by academic economists in the three-volume work «Economic Encyclopedia», which is the first of the kind in Ukraine and the CIS. It is defined how the categories of «capacity» and «liquidity» (for a banking institution) are combined, i.e.: solvency – liquidity; solvency – illiquidity; insolvency – liquidity; insolvency – illiquidity. A morphological decomposition is carried out in order to determine the most typical approaches to understanding this concept through the use of keywords in its characteristic. It is determined that the totality of morphological units characterizing the content of the term of «bank solvency» is sufficiently homogeneous and provides clarity of its definition. The results of content analysis are presented – by the indicator of relative frequency of repetitions are allocated the keywords «ability, solvency» that are present in more than half of the definitions. It is determined that in scientific sources the solvency of bank is considered as the ability of bank to meet its obligations within the appropriate time frame and is considered one of the most important indicators characterizing the financial stability of banking institution. Prospects for further research lie in identifying the most effective and accurate approach to understanding this category.