THE EVALUATION OF THE EFFICIENCY OF THE BANK SYSTEM’S FUNCTIONING AND DEVELOPMENT

The efficiency of the bank system’s functioning determines the dynamics and stability of the whole economy. Through the diversity and complexity of the modern bank system’s functions inevitably raises the question how to assess the performance of the banking system, to determine its development potential.For the analysis of the internal potential of the banking system it is advisable to use the following categories of objects: central bank, commercial credit resident organizations, governmental and nonprofit resident organizations, resident legal entities, individual persons, non-resident agents.Each element of the banking system has its own properties, which can be described by the parameters associated with the main areas of their activities. According to the selected objects within the banking system the indicators of its functioning results can be defined. However, the value of these parameters behaves over time in different ways – some increase, others decrease, some reflect a positive trend, and the others reflect a negative trend of the banking system. Therefore, there is a need to define an integrated assessment, which will comprehensively determine the results of the banking system functioning. It is advisable to use an approach based on the adaptation of the potential theory and the scale to determine the integral evaluation of the effectiveness by a range of indicators.Since the potential of the banking system isn’t just an indicator that characterizes its status as a category that simultaneously captures the content of the methodological foundations of a set of real processes and phenomena occurring in banking system, it is advisable to use the mathematical tools of the potential functions, specifically volume potential, to calculate potential of the banking system. This makes it possible to adequately display not only a particular situation, certain relationships, but also the processes, development trends and, thus, to assess the efficiency of the whole banking system.Using this approach, we can trace the development of banking system, where it’s necessary to use the indicators that reflect the resource capabilities and the results of operations of banking system as the integral indicator for evaluation the level of development of its potential.The main purpose of the evaluation of the efficiency of bank system’s functioning and development is to develop concrete and practical recommendations to enhance banking both at the level of banks and at the level of the whole banking system.