<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This study addresses the issue of whether banking performance impacts financial stability in Southeastern European countries. To answer this question, the GMM approach has been applied in the analyses of the panel data over the period 2000–2015 for Southeastern Europe. The findings reveal the presence of significant positive long-run relationship between ROA, ROE, trade openness, and human capital, while government expenditures have negative impact on financial stability. Trade openness, human capital and government expenditures can keep the financial system stable as a whole. The Granger causality analysis discloses the main hypothesis where the banking system in this part of Europe accounts for more than 80% of the financial system. The study sheds light to the policymakers and research about the role of banking performance on financial stability for this region of Europe.</p></abstract>

This study addresses the issue of whether banking performance impacts financial stability in Southeastern European countries. To answer this question, the GMM approach has been applied in the analyses of the panel data over the period 2000–2015 for Southeastern Europe. The findings reveal the presence of significant positive long-run relationship between ROA, ROE, trade openness, and human capital, while government expenditures have negative impact on financial stability. Trade openness, human capital and government expenditures can keep the financial system stable as a whole. The Granger causality analysis discloses the main hypothesis where the banking system in this part of Europe accounts for more than 80% of the financial system. The study sheds light to the policymakers and research about the role of banking performance on financial stability for this region of Europe.

Dynamic Impact of Banking Performance on Financial Stability: Fresh Evidence from Southeastern Europe

Fulbright Visiting Scholar University of Arkansas

Faculty of Economics and Administrative Sciences

Graduate School of Economics and Management Ural Federal University

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 International License.

This study addresses the issue of whether banking performance impacts financial stability in Southeastern European countries. To answer this question, the GMM...

Dynamic Impact of Banking Performance on Financial Stability: Fresh Evidence from Southeastern Europe

Published Online: Jan 26, 2021

Page range: 165 - 181

DOI: https://doi.org/10.2478/jcbtp-2021-0008

Keywords
Financial stability, Banking performance, Generalized Method of Moments, Southeastern Europe

© 2021 Veton Zeqiraj et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Dynamic Impact of Banking Performance on Financial Stability: Fresh Evidence from Southeastern Europe

Published Online: Jan 26, 2021

Page range: 165 - 181

DOI: https://doi.org/10.2478/jcbtp-2021-0008

KeywordsFinancial stability, Banking performance, Generalized Method of Moments, Southeastern Europe

© 2021 Veton Zeqiraj et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
Financial stability, Banking performance, Generalized Method of Moments, Southeastern Europe