Evaluating the Relationship Between Financial Sustainability and Socio-Economic Development of Countries

Viktoriia Kremen; Inna Shkolnyk; Andrii Semenog; Olha Kremen

doi:10.2478/ceej-2019-0003

Figures & Tables

Categories of global competitiveness index. Source: Schwab (2017).

Categories of global competitiveness index. Source: Own elaboration.

Countries of the world on the FD–FS matrix in 2009–2017. Source: Own elaboration. Note: ▴ – developed countries: AUT – Austria, CZE – Czech Republic, GBR – Great Britain, CAN – Canada, DEU – Deutschland, POL – Poland, USA – United States of America, • – developing countries: GEO – Georgia, KAZ – Kazakhstan, ZAF – South Africa, RUS – Russian Federation, ROU – Romania, TUR – Turkey, UKR – Ukraine.

Indicators of financial sustainability for different institutional sectors and markets

Key indicators of financial stability of depository institutions
I01	Ratio of regulatory capital and risk-weighted assets
I02	Ratio of regulatory capital of level I and risk-weighted assets
I03	Equity ratio and risk-weighted assets
I04	Capital share in assets
I05	The share of non-performing loans less provisions in the total amount of capital
I06	The share of non-performing loans in the total amount of loans
I07	Reserves for non-performing loans
I08	Distribution of loans by sectors, share in total loans
I09	Return on assets
I10	Return on equity
I11	Percentage interest margin in gross income
I12	Percentage of non-interest expenses in gross income
I13	Share of liquid assets in the total assets
I14	Value of liquid assets and short-term liabilities
I15	Value of affordable stable financing and necessary stable financing
I16	Ratio of net open position in foreign currency and capital

Additional indicators of the real estate market

I17	Ratio of regulatory capital and risk-weighted assets

Additional indicators of financial stability of depository institutions

I18	Ratio of large risks and capital
I19	Geographical distribution of loans by sectors, share in total loans
I20	Ratio of gross position of financial derivatives in assets and capital
I21	Ratio of the gross position of financial derivatives in liabilities and equity
I22	Share of income from financial instruments purchase and sale operations in gross income
I23	Share of staff costs at non-interest expenses
I24	Spread between interest rates on loans and deposit rates
I25	Spread between the highest and lowest interbank rates
I26	The ratio of customer deposits (excluding interbank loans) and total loans
I27	The share of loans in foreign currency in the total amount of loans
I28	The share of liabilities in foreign currency in the total amount of liabilities
I29	The growth rate of loans to the private sector

Indicators of financial stability of other financial corporations

I30	The share of assets in the total assets of the financial system
I31	Value of assets and GDP

Indicators of financial stability of funds in the money market

I32	Breakdown of investments by sectors, share in total investment
I33	Breakdown of terms of investment, share in total investment

Indicators of financial stability of insurance companies

I34	Value of equity and investment assets
I35	The ratio of received premiums minus premiums transferred by primary insurers to the total amount of premiums received
I36	Return on assets
I37	Return on equity

Indicators of financial stability of pension funds

I37	The ratio of liquid assets and projected retirement benefits next year
I39	Return on assets

Indicators of financial stability of non-financial corporations

I40	The ratio of debt and equity
I41	Return on assets
I42	Return on equity

Indicators of financial stability of non-financial corporations

I43	The ratio of income and expenses for debt servicing and repayment
I44	Ratio of income and interest expense
I45	Share of liquid assets in the total assets amount Number of bankruptcy cases
I46	The ratio of debt capital and GDP

Indicators of financial sustainability of households

I47	The ratio of household debt and GDP
I48	The ratio of payments by households to debt servicing and repayment and income
I49	The ratio of household boron and household income

Indicators of financial stability of the real estate market

I50	Dynamics of prices for commercial real estate
I51	The share of loans for residential real estate in the total amount of loans
I52	The share of loans for commercial real estate in the total amount of loans

The impact of financial sustainability on the social and economic development of developing and developed countries in 2009–2016

No.	Indicator	Developing countries			Developed countries

		Result	Criteria	Direction of connection	Result	Criteria	Direction of connection
1	GDP, $

	Fehner	−0.39	3.14	↓↓	0.14^*	1.06	–
	Spearman	−0.06^*	0.27	–	0.43	0.25	↑↑

2	Money supply, $

	Fehner	0.00^*	0.13^*	–	−0.06^*	0.42	–
	Spearman	0.00	0.27	–	0.34	0.34	↑↑

3	Gold and currency reserves, $

	Fehner	−0.04^*	0.26	–	−0.07^*	0.53	–
	Spearman	0.02^*	0.27	–	−0.26^*	0.26	–

4	Use of IMF loans, $

	Fehner	0.43	3.49	↑↑	–	–	–
	Spearman	0.24^*	0.26	–	–	–	–

5	High-tech export, $

	Fehner	0.46	3.85	↑↑	−0.18^*	1.33	–
	Spearman	0.56	0.23	↑↑↑	−0.67	0.20	–

6	Direct foreign investments (net flow), $

	Fehner	0.36	2.81	↑↑	−0.07^*	0.53	–
	Spearman	0.35	0.25	↑↑	−0.14^*	0.27	–

7	Interest rate on deposits,%

	Fehner	−0.08^*	0.57	–	0.75	4.24	↑↑↑↑
	Spearman	−0.08^*	0.3	–	0.74	0.39	↑↑↑↑

8	Real interest rate on loans,%

	Fehner	0.25^*	1.59	–	0.25^*	1.21	–
	Spearman	0.27^*	0.32	–	0.30^*	0.42	–

9	Financial sector loans to residents,% ВВП

	Fehner	−0.29	2.19	↓	0.05^*	0.30	–
	Spearman	−0.45	0.24	↓↓	0.08^*	0.57	–

10	Consumer price index,% за рік

	Fehner	0.04^*	0.26	–	−0.25	1.90	↓
	Spearman	−0.10^*	0.27	–	−0.24^*	0.26	–

11	Unemployment rate,%

	Fehner	−0.54	4.66	↓↓↓	−0.36	2.81	↓↓
	Spearman	−0.50	0.24	↓↓↓	−0.45	0.24	↓↓

Evaluating the Relationship Between Financial Sustainability and Socio-Economic Development of Countries

Figures & Tables

Fig 1

Fig 2

Fig. 3

Indicators of financial sustainability for different institutional sectors and markets

The impact of financial sustainability on the social and economic development of developing and developed countries in 2009–2016

Paradigm

My account