Indicators of the Credit Cycle in the Digital Economy

Abstract

Purpose It is to create algorithms for assessing financial stability of commercial banks in the context of technological innovations; to determine key indicators of financial stability, which take into account the factors of growth in consumer lending and the level of digital transformation of banks. Design/methodology/approach It is noted the need to improve existing methods for assessing the financial condition of technological transformation of the banking business and the introduction of new standards for its regulation. The expansion of consumer lending can lead to imbalances, so the assessment system needs to refine and expand the set of key indicators. The use of forecasted loan reserves in the assessment reduces procyclical factors and will reduce unexpected losses of banks. Findings It is shown that the current systems for assessing the financial condition of banks do not always reliably reflect the processes of expanding bank lending. In the context of introducing financial innovations, more attention should be paid to indicators of the level of loan reserves formed, the dynamics of their change in relation to banks’ equity, criteria for scoring individuals (“digital client profile”) should be developed, and a system of indicators for credit services of commercial banks should be developed, which will be placed on the showcase of the Bank of Russia's Marketplace. Originality/value A promising method for solving these problems is to modernize the system, considering economic cycles and the level of technological innovation in banks. Based on an improved system of banks, it is possible to track the phases of the credit cycle more accurately in Russia.