Methodological approaches to assessing the efficiency of commercial banks’ currency exchange transactions

Aim. The work aimed to develop and substantiate methodological approaches to a comprehensive assessment of the efficiency of commercial banks’ currency exchange transactions.

Objectives. The work seeks to define the stages and components of currency exchange transaction analysis, to characterize the indicators used in the method, including quantitative and qualitative criteria, taking into account the influence of currency risk factors, fee-based income, and regulatory requirements.

Methods. The study is based on theoretical developments in the field of banking efficiency theory, as well as on a study of the practical application of management performance assessment tools to achieve positive financial results for credit institutions from currency exchange transactions. The authors used qualitative analysis methods, as well as a quantitative approach based on statistical analysis and quantitative methods, including performance assessments through financial indicators.

Results. It has been established that an increase in the number and volume of currency exchange transactions will lead to an increase in fee-based and, consequently, operating income. This will positively impact the credit institution’s bottom-line result. However, inefficient currency exchange transactions can not only reduce profits, but also nullify them or make them negative. The proposed method can be used to evaluate the efficiency of cash transactions, non-cash currency exchange transactions, and the performance of relevant departments with a credit institution’s open foreign exchange position. It also enables to calculate ratios and, while using them, draw conclusions about the positive or negative impact of currency exchange transactions on the final financial result.

Conclusions. Analyzing the efficiency of commercial banks’ currency exchange transactions may have a positive impact in the future on the functioning of not only individual banks but also the Russian financial system as a whole.

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