Finance and Credit

A study into the terminology of financial stability of the commercial bank

Vol. 23, Iss. 36, SEPTEMBER 2017

PDF  Article PDF Version

Received: 21 July 2017

Received in revised form: 4 August 2017

Accepted: 21 August 2017

Available online: 29 September 2017

Subject Heading: Banking

JEL Classification: G20, G21

Pages: 2159–2173

Klaas Ya.A. Kazan Federal University, Kazan, Republic of Tatarstan, Russian Federation

Subject To adequately assess the financial sustainability of the bank, a modification of the terminological aspect is necessary. Most existing terminology interpretations do not provide a comprehensive view of the bank's sustainability, nor do they indicate the importance of ensuring the bank's sustainability for the country's economy, nor do they take into account modern banking business trends.
Objectives Based on an analysis of the various authors' approaches, the article aims to clear the terms bank stability and financial stability of the bank, as well as determine the stability modes of the bank and criteria of financial stability of the credit institution.
Methods For the study, I used methods of analysis, synthesis, induction and deduction, abstraction and analogy, as well as general scientific approaches, namely, the systems and comprehensive ones.
Results The article identifies the differences between the sustainability, reliability and stability notions and it interprets them. As well, the paper defines the bank stability notion, taking into account the banking activity specific issues, and analyzes the modes of stability of the credit institution and identifies the most significant signs of the bank's financial stability.
Conclusions The article concludes that, for all semantic similarity, the terms sustainable, reliable and stable differ from each other, the specifics of banking activities are taken into account in only a few of the bank's soundness definitions. Given the current trends in banking business, there is a need to complement soundness, and there is still no well-developed definition of financial soundness for commercial banks. As a result of the study, the article suggests that the existing interpretation of the definitions should be modified.

Keywords: bank, sustainability, stability, financial soundness


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