Determinants of Financial Stability in Banks: The Impact of Key Regulatory Financial Indicators

Анотація

The financial stability of banks remains a critical component of macroeconomic resilience, particularly in the face of ongoing geopolitical uncertainties and post-pandemic recovery. In this context, there is an urgent need for data-driven models capable of accurately assessing institutional soundness. This study aims to develop and empirically validate an econometric model to evaluate the financial stability of JSC “Oschadbank” (State Savings Bank of Ukraine) by analysing the impact of key regulatory indicators. The methodological approach involved descriptive statistical analysis, normality testing, Box–Cox transformations, and multiple regression modelling using annual data from 2018 to 2024. The model incorporated four financial ratios (Autonomy Ratio (N6), Own Funds Adequacy Ratio (N8), Equity Manoeuvrability Ratio (N9), Loan Loss Provision Coverage Ratio (N12)), with transformations applied to ensure statistical robustness. Key diagnostic tests – multicollinearity (VIF), heteroskedasticity (Breusch–Pagan), and residual analysis – were conducted, and robust standard errors were applied due to kurtosis-related violations of normality. The final regression model, based on three explanatory variables (N6, N8, and transformed N9), explains approximately 45% of the variation in the financial stability ratio (R² = 0.4489; Adj. R² = 0.3801; F(3,24) = 6.52; p < 0.01). All coefficients were statistically significant, with N9 exhibiting the strongest positive effect (β = 0.00327; p = 0.019), while H6 had a negative effect (β = –0.00046; p = 0.001), and N8 a moderate positive effect (β = 0.000044; p = 0.000). These results confirm that financial stability is sensitive to internal capital structure dynamics, providing a foundation for regulatory optimisation and strategic bank management.

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