MODERNIZATION OF CREDIT RISK MANAGEMENT IN THE CONTEXT OF EXTERNAL FINANCING: A COMPARATIVE ANALYSIS OF UKRAINE AND POLAND

Abstract

The article examines contemporary methodologies for credit risk management in banking systems, particularly in the context of external financing provided by international financial organisations (IFIs), such as the International Monetary Fund (IMF), the World Bank, and the European Bank for Reconstruction and Development (EBRD). It delves into the adoption and practical application of globally recognised regulatory frameworks, such as Basel II, Basel III, and International Financial Reporting Standards (IFRS 9), and the role of risk-based supervisory practices (SREP). Additionally, the article reviews the transformative processes of banking sector reforms in Ukraine and Poland, focusing on their respective approaches to tackling non-performing loans (NPLs), reserve provisioning, and overall credit risk mitigation strategies. A comparative analysis is presented, highlighting the trajectory of NPL ratios, reserve adequacy, and the efficacy of institutional reforms in stabilising banking systems. The findings underscore the critical role of regulatory modernisation and structured collaborations with IFOs in enhancing resilience against systemic risks. The research also addresses the challenges posed by economic crises and geopolitical factors, particularly in the case of Ukraine. It evaluates the extent to which external funding and institutional oversight contribute to sustaining financial stability. Key insights include the identification of best practices and strategic recommendations for further improvement in credit risk management. The article argues that while both countries have made significant progress, disparities in the scale and scope of implemented reforms remain evident, influenced by differing economic, political, and institutional contexts. By offering a nuanced perspective on the interplay between regulatory measures and credit risk dynamics, the research provides valuable insights for policymakers, financial institutions, and international stakeholders seeking to foster robust and adaptable banking systems. It serves as a foundation for understanding how targeted regulatory interventions and international cooperation can drive resilience and stability in banking sectors facing varying levels of systemic risk.