Financial Stability of the Bank: Analysis and Management

The purpose of the work is to form a model for assessing the financial stability of a bank in modern conditions using an econometric approach, and to test it on the banking data. Financial stability in work is considered as the ability of an organization to maintain its operating activities continuously, fulfill obligations in a timely manner and generate a positive financial result based on the results of the reporting period, regardless of the presence of external shocks. The criterion of financial stability in the work was determined by the common equity, as a percentage of the bank’s risk-weighted assets (the “H1” ratio for Russian banking system). A study was carried out on the data of 10 banks of the Russian Federation from 2019 to 2023. In the course of the study, a model, calculating the expected value of the H1 indicator depending on external and internal factors, evaluated by the least squares econometric approach was tested. The results of the study confirm the influence of the bank's internal and economy’s external factors on the dependent variable. The predictive characteristics of the model are applicable for the practical implementation of scenario analysis and stress testing of the financial stability of a commercial bank.