FUNCTIONING OF UKRAINЕ’S CRЕDIT MARKЕT AMIDST THЕ WAR: THЕ IMPACT OF JUDICIAL RЕFORM AND CHANGЕS IN THЕ JUDICIAL SYSTЕM

The functioning of Ukraine’s credit market amidst the full-scale war is shaped by the simultaneous influence of macro-financial, banking, institutional, and legal factors. Particular importance is attached to the capacity of the judicial system to ensure timely protection of creditors’ rights and effective enforcement of court judgments, since the duration of distressed-debt recovery directly affects its economic value. The study aims to assess the functioning of Ukraine’s credit market during 2022–2025 and determine the financial significance of judicial reform, changes in judicial-system capacity, and the duration of judicial and enforcement proceedings for banks’ credit risk. The information base comprises official materials of the National Bank of Ukraine, the Council of Europe’s CEPEJ, the High Council of Justice, the High Qualification Commission of Judges of Ukraine, the Supreme Court, and applicable legislation. The methodological approach combines analysis of net hryvnia lending and non-performing loans, chain indexing of credit portfolios, assessment of judicial operational capacity using Clearance Rate, Disposition Time, and staffing indicators, and scenario-based discounting of expected recoveries. The findings confirm a recovery in lending activity after the initial wartime deterioration, while also demonstrating that this recovery cannot be directly attributed to judicial reform because credit-market developments were shaped by a broader combination of factors. The institutional restoration of judicial governance bodies has occurred alongside persistent staffing and operational constraints. Scenario analysis shows that a longer recovery period reduces the present value of expected recoveries and increases LGD and expected credit losses. The scientific novelty lies in developing an approach that links actual credit-market dynamics with judicial-system capacity through a specific financial channel based on the time value of recovery, without treating chronological concurrence as evidence of a causal effect of judicial reform. The practical value of the findings lies in the possibility of incorporating the duration of judicial and enforcement proceedings as a distinct scenario parameter in credit-risk assessment, collateral requirements, and expected credit-loss estimation.