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Crisis management and the banking system in Montenegro

Author

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  • Radoje Žugić

    () (Minister of finance, Montenegro)

Abstract

General deregulations of financial markets and improper risk management have seriously shaken banking systems worldwide during the global financial crisis. The key challenge in the upcoming period is to find an optimum balance between necessary regulation and avoiding overregulation that could jeopardize competitiveness of the banking system. The emphasis should not confine to the capital adequacy ratio but it should also cover liquidity because problems with insufficient liquidity could bring a crisis even to a bank that otherwise meets the statutory solvency criteria. The Montenegrin banking sector was no exception and it was severely hit by the crisis. This paper shows the movement of the banking system indicators through the following stages: preventive actions, strengthening of resilience, and crisis management. In addition, the paper shows the process of the banking system restructuring, followed by the conclusion that there can be no banking system restructuring without the restructuring of the real economy.

Suggested Citation

  • Radoje Žugić, 2013. "Crisis management and the banking system in Montenegro," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 2(1), pages 5-19.
  • Handle: RePEc:cbk:journl:v:2:y:2013:i:1:p:5-19
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    File URL: http://www.cbcg.me/repec/cbk/journl/vol2no1-1.pdf
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    References listed on IDEAS

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    1. Barth,James R. & Caprio,Gerard & Levine,Ross, 2008. "Rethinking Bank Regulation," Cambridge Books, Cambridge University Press, number 9780521709309, May.
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    Cited by:

    1. Snezana Popovčić-Avrić & Vule Mizdraković & Marina Đenić, 2013. "Analysis of Financial Structure of the Serbian Banking Sector: Impact of the Financial Crisis," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 2(2), pages 81-92.

    More about this item

    Keywords

    Montenegro; banking system; risk; crisis; solvency;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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