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The Assessment Of The Financial Soundness Of The Banking Sectors In Balkan Countries Using "Early Warning Indicators" - A Comparative Study With Policy Implications

Author

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  • Dr. Rezarta Shkurti (Perri)

    (Lecturer, University of Tirana, Fakulteti i EkonomisA�, Rruga e Elbasanit - Tirana, Albania)

  • Dr. Brunilda Duraj

    (Lecturer, University of Tirana, Fakulteti i EkonomisA�, Rruga e Elbasanit - Tirana, Albania)

Abstract

This paper uses an early warning model that calculates the Probability of Distress of the banking sectors of seven Western Balkan countries. The application of the model on a country level has revealed that the riskiest country in Western Balkan is Montenegro whereas the healthiest one is Serbia. Albania, Kosovo and Macedonia are characterized by moderate risk levels. We recommend that the efforts of the supervisory authorities in each country should be focused on capitalization in the log run and on the profitability and managerial quality in the short run. The enhancement of the supervisory practices integration beyond the existing Memorandum of Understanding and the creation of a centralized dataset for Balkan banking institutions are recommended.

Suggested Citation

  • Dr. Rezarta Shkurti (Perri) & Dr. Brunilda Duraj, 2010. "The Assessment Of The Financial Soundness Of The Banking Sectors In Balkan Countries Using "Early Warning Indicators" - A Comparative Study With Policy Implications," Journal Articles, Center For Economic Analyses, pages 33-48, June.
    • Handle: RePEc:cmk:journl:y:2010:p:33-48
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    References listed on IDEAS

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    Cited by:

    1. Rovena Bahiti & Rezarta Shkurti (Perri) & Juljana Babasuli, 2011. "Impact of the Latest Financial Crises on a Bank-Based Financial System: Case of Albania," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 14(39), pages 3-23, March.
    2. Yi-Shu Wang & Xue Jiang & Zhen-Jia-Liu, 2016. "Bank Failure Prediction Models for the Developing and Developed Countries: Identifying the Economic Value Added for Predicting Failure," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(9), pages 522-533, September.

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    More about this item

    Keywords

    early warning system; banking sector assessment; supervisory framework;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G01 - Financial Economics - - General - - - Financial Crises

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