Market and credit risk in the modern banking system

The article presents the results of a study of theoretical and applied aspects of market and credit risk in the modern banking system. In the introduction, the relevance of the research is justified in the context of increasing financial instability, tightening regulatory requirements, and the growing impact of external shocks on banking activities. Particular attention is paid to the role of banks as key intermediaries between borrowers and investors and to the high vulnerability of the banking sector to systemic risks. The materials and methods section is based on the analysis and generalization of scientific literature, a comparative approach to assessing different types of banking risks, and the systematization of classical and modern risk management models. The methodological framework includes concepts of market risk and credit risk, as well as quantitative approaches to their measurement, including Value at Risk (VaR) and probability of default indicators widely used in banking practice. The results of the study reveal the key characteristics of market and credit risk manifestation in the banking system and demonstrate their interrelationship and impact on banks’ financial stability. It is shown that credit risk remains the dominant source of potential losses, while market risk primarily affects short-term financial performance of banks. The discussion emphasizes the importance of an integrated approach to banking risk management and the need to improve risk assessment tools under conditions of growing uncertainty. The study concludes that the systematization of market and credit risk assessment methods has practical significance for enhancing the overall stability of the banking system.