The role of credit management in organizing effective credit activities of banks

Kovalenko Victoria
D. Sc. (Economics), Professor, Professor, Department of Banking, Odesa National Economic University, Odesa, Ukraine, E-mail:kovalenko-6868@ukr.net, ORCID ID: https://orcid.org/0000-0003-2783-186X

Dudko Daria
Master's student of the Department of Banking, Odesa National Economic University, Odesa, Ukraine, E-mail:dasha95aa95@gmail.com

Cite this article:

Kovalenko V., Dudko D. (2024) The role of credit management in organizing effective credit activities of banks. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Mistse kredytnoho menedzhmentu v orhanizatsii efektyvnoi kredytnoi diialnosti bankiv; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odesa National Economic University (ISSN 2313-4569), Odesa National Economics University, Odesa, No. 10 (323), pp. 62-69.

Abstract

The article is dedicated to identifying the role of credit management in ensuring the effective credit activities of Ukrainian banks. The purpose of the article is to substantiate the key components of credit management to enhance the efficiency of banks' credit operations. The research employs methods of analysis, synthesis, generalization, computational-analytical approaches, and graphical representation. It has been proven that geopolitical shocks, stress events of various types—including financial, socioeconomic, political, and others—that cause disruptive changes in the banking systems of different countries in recent decades highlight the shortcomings of modern banking management practices. The lag in the development of banking management compared to the rapid expansion of the banking business has been one of the reasons for bank failures. It has been determined that credit risk is the current or potential risk to earnings and capital arising from a counterparty's inability to fulfill the terms of any financial agreement with the bank or otherwise meet its obligations. An analysis of the share of non-performing loans in Ukrainian banks has been conducted. The article outlines the key principles of organizing an effective credit management system and its impact on the efficiency of banks' credit activities. It has been proven that the primary objective of credit management should be to ensure the financial stability and reliability of the bank. Therefore, future research should focus on promoting ethical behavior among bank employees in establishing business credit relationships with clients.

Keywords

credit risk, credit management, stress management, creditworthiness assessment, credit activities.

JEL classification: G210; E510; G320; DOI: https://doi.org/10.32680/2409-9260-2024-10-323-62-69

UD classification: [336.77:005]:336.71

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