The article investigates the impact of problem assets, with non-performing loans (NPLs) as their core component, on the financial stability of Ukraine’s banking system and the country’s economic security. The analytical focus is placed on the dynamics and structure of NPLs as the primary channel through which credit risk is transmitted into the financial system. The study identifies key internal and external determinants of the accumulation of problem assets, including macroeconomic shocks, wartime and geopolitical risks, insufficient capital adequacy of individual banks, a high share of insolvent borrowers, and low transparency of banking operations. The paper substantiates policy directions aimed at improving the management of problem assets: the establishment of a centralized NPL resolution institution, the development of an organized secondary market for distressed loans, the enhancement of loan restructuring procedures, the integration of digital technologies into the credit process, and the strengthening of corporate governance. The proposed recommendations are designed to reinforce banks’ financial resilience, improve liquidity and capital positions, restore credit activity, and strengthen Ukraine’s economic security under current financial and geopolitical challenges. Method (methodology). The research methodology combines general scientific and specialized methods, including economic analysis and systematization, comparative and statistical analysis, modelling of the impact of problem assets on banks’ financial stability, forecasting and risk assessment techniques, as well as a review and synthesis of academic sources. The results. The study identifies the principal internal and external factors through which problem assets affect the financial stability of the banking system. It outlines policy directions for improving the management of non-performing loans and formulates practical recommendations for banks and public authorities regarding the reduction of problem assets, strengthening of liquidity and capital positions, enhancement of restructuring procedures, and digitalization of the credit process.
A Wed, study studied this question.