Analysis of the Deposit Resources’ Regional Allocation in Ukraine

Abstract

The intermediary function of financial corporations is embodied in the redistribution of temporarily free funds raised from certain institutional units to those units that have a need for them. A significant part of such borrowings takes the form of deposits placed with commercial banks. Amounts accumulated in the form of deposits are an important component of the resource base of banking institutions. This allows them to conduct assets banking operations to lend the population and enterprises of the economy's real sector and contribute to economic growth in the country.

The purpose of the study is to perform a statistical analysis of the regional allocation of deposits held with Ukrainian commercial banks over the period 2010-2018.

The conceptual basis of the study is formed by the approaches of the System of National Accounts and Monetary Statistics. The study is based on the National Bank of Ukraine (NBU) information. The results obtained indicate a high degree of heterogeneity of the regions of Ukraine in terms of deposits attracted by commercial banks. Regional variation in deposits amounts is too big. Three regions can be classified as outliers. These are the capital region – Kyiv region and the most industrially developed Dnepropetrovsk and Donetsk region. This conclusion is confirmed by the analysis of variation and the form of regions' distribution. The most significant changes in the distribution of regions occurred in 2014 due to the dramatic events of modern Ukrainian history.

We also conclude the growing level of deposits' concentration based on the concentration index-3, concentration index-5, Herfindahl-Hirschman Index and Gini coefficient.

Since geographical diversification is a necessary prerequisite for reducing the riskiness of deposit operations, appropriate managerial decisions must be taken.

Keywords: deposit resources, regional allocation, deposit-taking corporations, concentration indices, Herfindahl-Hirschman Index, Gini coefficient, Lorenz curve

JEL Classification: G21, O16, O18, R11