UKRAINIAN INDEX
OF EFFECTIVE INTEREST RATES
ON CONSUMER LOANS FOR INDIVIDUALS
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Publications for tag state regulation

 

CREDITMARKET INDEX - UKRAINIAN INDEX OF EFFECTIVE INTEREST RATES ON CONSUMER LOANS FOR INDIVIDUALS

Today we may observe a heavy growth of car credits. First of all, it’s explained by the aggressive position of carmakers, auto dealers, and car importers. They promote credit accommodation activity of banks. Business activity revival is a wonderful thing. Have we learned all lessons from the past crisis?

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Active involvement in the race for extension of the unsecured consumer lending can force banks into tough mid-term financial losses. Guile of problems of this kind consists in the fact that apart from evident fraud cases (which are promptly tracked within strict operating processes), losses are recorded as late as six months after the expansion started, provided that banks have quite an enhanced risk management and tough monitoring of troubled debts on the intervals. We’d like to stress that credit portfolios are permanently growing after an active start, as a rule, and it’s a common error to estimate indices based on the portfolio in this crediting segment.

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Taking into consideration information about consumer loans excess, the following questions arise:
Does it increase too fast? What product groups show the increase? What is a driver for this increase? And what are consequences for our national economy, population, and banks that extensively operate in this retail credit market segment? Is there a need to tighten regulations for banks that provide consumer loans? What conclusions do decision-makers in banks, supervisory boards, and shareholders has to draw?

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