Financial stability and financial soundness: theoretical harmonization of defenitions

Orlov Volodymyr
Ph.D. in Economics, First Deputy Head of the Dnipropetrovsk Regional State Administration, Dnipropetrovsk, E-mail:ovv0601@gmail.com

Cite this article:

Orlov V. (2021) Financial stability and financial soundness: theoretical harmonization of defenitions. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Finansova stijkist ta finansova stabilnist: teoretichne uzgodzhennya definicij; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 11-12 (288-289), pp. 42-48.

Abstract

The paper examines the most commonly used terms, such as balance, stability, sustainable development, financial steadiness, financial stability, and focuses on the content and logic of the relationship between them. In addition, the paper has analyzed the study of the affiliation of the authors who examined these terms, including "financial steadiness", in the interpretation of scientific publications of the Global Financial Centers, the international scientometric database Scopus using VOSviewer 1.6.15. A map has been built that also confirms the relationship between the development of the financial system and the growth of the economic system. The existence of at least three definitions has been established that do not have clear distinctions in the English-language economic literature: financial stability and financial sustainability in a double interpretation (financial soundness / financial steadiness) in terms of its explanation for the financial system. An in-depth structural and decomposition compositional analysis of the concepts of "financial stability" and "financial steadiness" was carried out to harmonize them and to determine the list of indicators that will characterize the state of the financial system and be relevant for determining structural imbalances in the financial system, their possible impact on the economic security of the Ukrainian national economy. The author's definition of financial stability is proposed as the ability of the financial system for a certain period of time and in a certain range to maintain the qualitative characteristics of financial steadiness. In addition, in the event of endogenous and exogenous disturbances and shocks, it will provide self-correction of financial flows and compensatory reactions, thereby returning the system to equilibrium.

Keywords

equilibrium, stability, sustainable development, financial steadiness, financial system, economic system, economic growth.

JEL classification: G100

UD classification: 336.11

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