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The Impact Of Household Sector Risks To The Soundness Of The Romanian Banking System

Author

Listed:
  • Nicolae Dardac

    (Academy of Economic Studies Bucharest)

  • Iustina Boitan

    (Academy of Economic Studies Bucharest)

Abstract

The paper focuses, primarily, on assessing if risks associated to household sector havea significant impact on Romanian banking system’s soundness and stability, by establishing whichhousehold specific variables are the most important and have to be monitored. We have consideredseveral representative prudential and performance banking system’s indicators and we haveperformed a regression for each one, against a set of 12 explanatory variables, concerninghouseholds’ balance sheet, their net earnings, the dynamics of unemployment rate, the degree ofindebtedness, banking system’s exposure to currency risk associated to households. Our empiricalfindings suggest that banking system profitability, expressed as return on equity, and liquidityindicator are the most influenced by households’ financial behavior and the evolutions on the labormarket.

Suggested Citation

  • Nicolae Dardac & Iustina Boitan, 2009. "The Impact Of Household Sector Risks To The Soundness Of The Romanian Banking System," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(11), pages 1-59.
  • Handle: RePEc:alu:journl:v:1:y:2009:i:11:p:59
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    File URL: http://oeconomica.uab.ro/upload/lucrari/1120091/59.pdf
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    References listed on IDEAS

    as
    1. Cottarelli, Carlo & Dell'Ariccia, Giovanni & Vladkova-Hollar, Ivanna, 2005. "Early birds, late risers, and sleeping beauties: Bank credit growth to the private sector in Central and Eastern Europe and in the Balkans," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 83-104, January.
    2. Enrique G. Mendoza & Marco E. Terrones, 2008. "An anatomy of credit booms: evidence from macro aggregates and micro data," International Finance Discussion Papers 936, Board of Governors of the Federal Reserve System (U.S.).
    3. Leslie Hull, 2003. "Financial deregulation and household indebtedness," Reserve Bank of New Zealand Discussion Paper Series DP2003/01, Reserve Bank of New Zealand.
    4. Philip Turner, 2006. "The banking system in emerging economies: how much progress has been made?," BIS Papers chapters,in: Bank for International Settlements (ed.), The banking system in emerging economies: how much progress has been made?, volume 28, pages 1-9 Bank for International Settlements.
    5. Marco Terrones & Enrique G. Mendoza, 2008. "An Anatomy of Credit Booms; Evidence From Macro Aggregates and Micro Data," IMF Working Papers 08/226, International Monetary Fund.
    6. Shubhasis Dey & Ramdane Djoudad & Yaz Terajima, 2008. "A Tool for Assessing Financial Vulnerabilities in the Household Sector," Bank of Canada Review, Bank of Canada, vol. 2008(Summer), pages 47-56.
    7. Ceyla Pazarbasioglu & Gudrun Johnsen & Paul Louis Ceriel Hilbers & Inci Ötker, 2005. "Assessing and Managing Rapid Credit Growth and the Role of Supervisory and Prudential Policies," IMF Working Papers 05/151, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    banking system vulnerability; prudential indicators; households’ financial position; logisticregression;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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