Macroeconomic factors that influence the bank loans rate in international and Ukrainian practice

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The goal of the paper is to disclose the links between the dynamics of macroeconomic indicators and the level of bank loan rates based on international and Ukrainian practice. On the basis of the previous analysis, the paper also aims to identify the key trends in the formation of loan prices in the long run and identify problematic issues related to bank loan rates. The main characteristics of bank lending rates in Ukraine are: a) their high rates; b) sharp changes in the weighted average bank loan rates from year to year; c) higher loan rates for households compared to the cost of bank loans for businesses; d) higher bank loan rates for short- and medium-term loans versus long-term ones; e) lower rates on loans in foreign currency compared to the loans in hryvnia; and f) high share of non-performing loans to households and businesses in bank portfolios. In the context of world and Ukrainian practice, the paper demonstrates the reverse effect between macroeconomic indicators such as GDP per capita, the ratio of loans to GDP, the ease of doing business index and bank loan rates. The article also demonstrates a direct relationship between the dynamics of inflation rate in the country, the dynamics of non-performing bank loans and their rates.

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    • Figure 1. Bank loans rates worldwide in 2018, %
    • Figure 2. Dynamics of bank loans rates by currency for the period from 2005 to 2020, %
    • Figure 3. Bank loans rates by the economy sectors for the period from 2005 to 2020, %
    • Figure 4. Bank loans rates by maturity for the period from 2005 to 2020, %
    • Figure 5. Relationship between GDP per capita and bank loans rate (122-127 countries in different phases of their own development as of 2018)
    • Figure 6. Relationship between the inflation rate and bank loans rate (122-127 countries in different phases of their development as of 2018)
    • Figure 7. Dynamics of inflation bank loans and bank deposits rates in 2005–2020, %
    • Figure 8. The relationship between the level of creditworthiness of the economy and bank loans rate (122-127 countries in different phases of their development as of 2018)
    • Figure 9. Share of non-performing loans in the total amount of loans issued at the end of 2019, %
    • Figure 10. The relationship between the ease of doing business index and the bank loans rate (122-127 countries in different phases of their development as of 2018)
    • Methodology
      Sergiy Ivakhnenkov, Svitlana Hlushchenko
    • Project administration
      Sergiy Ivakhnenkov, Svitlana Hlushchenko
    • Supervision
      Sergiy Ivakhnenkov, Svitlana Hlushchenko
    • Writing – review & editing
      Sergiy Ivakhnenkov, Svitlana Hlushchenko, Kamilla Sverenko
    • Conceptualization
      Svitlana Hlushchenko, Kamilla Sverenko
    • Formal Analysis
      Svitlana Hlushchenko, Kamilla Sverenko
    • Validation
      Svitlana Hlushchenko
    • Data curation
      Kamilla Sverenko
    • Investigation
      Kamilla Sverenko
    • Visualization
      Kamilla Sverenko
    • Writing – original draft
      Kamilla Sverenko