The March issue of Visnyk of the National Bank of Ukraine deals with actual topics of a central bank's regulatory activity and practical aspects of an impact of some macroeconomic factors on economic agents' behavior.
In particular, researchers' works thoroughly examined two key approaches to ensuring central bank's independent. First, there were researched behavior features of motivation of economic agents' actions. Second, there was simulated an impact of credit risks on the efficiency of operation of banks and firms borrowing from them.
Articles published in the new issue contain science-based conclusions and practical recommendations on the following topics:
• The role of central bank independence in ensuring financial stability
The article “Central Bank Independence and Financial Stability: Orthodox and Heterodox Approaches” by Viktor Koziuk, Dr habil., a member of the NBU Council, studies the conditions under which central bank’s independence allows it to exercise its function on ensuring financial stability. The author considers two approaches to formation of central bank independence: the orthodox and heterodox ones. The author believes that the orthodox view is contradictory in its nature. On the one hand, central bank’s independence may have negative implications for the bank’s responsibility; on the other hand, deflation risks are in conflict with price stability principles. The heterodox approach provides for greater responsibility of central banks for financial stability and requires a qualitative institutional environment. Underlining the need for preserving the mandate priority with respect to ensuring of financial stability, the author draws attention to the fact that the issues on ensuring of financial stability should be clearly institutionalized. This will facilitate central bank's independence.
• Historical preconditions for development and the current state of behavioral finance
Pavlo Illiashenko, a representative of the School of Business and Governance, Tallinn University of Technology, in his article "Behavioral Finance: History and Foundations" makes a study of an influence of ideological and political factors on the economic agents' behavior.
In the author's opinion, this influence is not always obvious, but it affects the quality of decisions made by economic agents. The survey research considers the development and psychological foundations of the behavioral finance theory. According to its results, convincing arguments about a dichotomy between behavioral and classical finance were obtained.
• A probability of default influence on the dynamics of economic processes
The article "Stock-Flow Consistent Modelling of Default Events Sequence in a Closed Economy" presents the results of a scientific research conducted by Ihor Voloshyn, Chief Economist of the NBU Banking Supervision Department. In the context of its research, the author developed a stock-flow consistent model of a closed economy. The model was built based on sequential examining of the full chain of events starting from the default of firms through the fire-sale of goods towards write-offs of bad loans.
The model developed by the researcher helps consistently analyze economic developments and study the influence of such key parameters as the probability of default, the rate of fire-sales, the recovery rate, and interest rates on loans and deposits on the performance of banks and companies.
We emphasize that the published issue of Visnyk of the National Bank of Ukraine is the seventh in the context of the revised format of the journal. From September 2015, the Visnyk of the National Bank of Ukraine journal is published on the official NBU site in electronic format quarterly in Ukrainian and English.
The editorial board invites academics, experts, financiers and representatives of banking academic community to join the research within the scope of the journal and send research materials to be reviewed and published to email:[email protected].