Issues

Journal & Issues

Volume 11 (2022): Issue 3 (September 2022)

Volume 11 (2022): Issue 2 (May 2022)

Volume 11 (2022): Issue 1 (January 2022)

Volume 10 (2021): Issue 3 (September 2021)

Volume 10 (2021): Issue 2 (May 2021)

Volume 10 (2021): Issue 1 (January 2021)

Volume 9 (2020): Issue 3 (September 2020)

Volume 9 (2020): Issue 2 (May 2020)

Volume 9 (2020): Issue s1 (July 2020)

Volume 9 (2020): Issue 1 (January 2020)

Volume 8 (2019): Issue 3 (September 2019)

Volume 8 (2019): Issue 2 (May 2019)

Volume 8 (2019): Issue 1 (January 2019)

Volume 7 (2018): Issue 3 (September 2018)

Volume 7 (2018): Issue 2 (May 2018)

Volume 7 (2018): Issue 1 (January 2018)

Volume 6 (2017): Issue 3 (September 2017)

Volume 6 (2017): Issue 2 (May 2017)

Volume 6 (2017): Issue 1 (January 2017)

Volume 5 (2016): Issue 3 (September 2016)

Volume 5 (2016): Issue 2 (May 2016)

Volume 5 (2016): Issue 1 (January 2016)

Volume 4 (2015): Issue 3 (September 2015)

Volume 4 (2015): Issue 2 (May 2015)

Volume 4 (2015): Issue 1 (January 2015)

Volume 3 (2014): Issue 3 (September 2014)

Volume 3 (2014): Issue 2 (May 2014)

Volume 3 (2014): Issue 1 (January 2014)

Journal Details
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English

Search

Volume 3 (2014): Issue 2 (May 2014)

Journal Details
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English

Search

5 Articles
access type Open Access

Use and Limitations of the Reserve Requirement Policy in Montenegro

Published Online: 30 May 2014
Page range: 5 - 20

Abstract

Abstract

Since reserve requirement is the only monetary policy instrument used in Montenegro, it has been subject to frequent amendments since the global crisis outbreak. The analysis of the monetary demand model showed that there is an active transmission mechanism of change in the reserve requirement rate on the deposits trend reflects on lending activity. Also, there is a significant impact of FDIs on deposits trending in the banking system, as well as the positive impact of turnover on stock exchange on the deposits and loans trend. Finally, it was found that the financial crisis has caused negative trends in loans and deposits. On the other hand, the impact of changes in the reserve requirement on the economic activity in Montenegro could not be determined. This is primarily due to the fact that the transmission mechanism of the effect of reserve requirement on economic activity is too long to be able to estimate the model that does not allow the dynamics of the independent variables. The second reason is that industrial output index is only an indirect indicator of the economic activity.

Keywords

  • reserve requirement
  • monetary transmission mechanism
  • monetary demand model
  • credit expansion
  • Montenegrin banking system
access type Open Access

Assesment of the Interest Rates in the Serbian Banking Sector

Published Online: 30 May 2014
Page range: 21 - 35

Abstract

Abstract

Lending interest rates (IR) in the Serbian market are generally viewed as high. In accordance with the official NBS (National bank of Serbia) data for 2010: lending (IR) was 10.4% p.a., deposit IR was 4.2% p.a., and spread was 6.3% p.a. At the same time, IR on cross-border loans was 3.7% p.a. It means that the use of cross-border loans was a better solution for companies which were in position to take them. The indicator of IR spread in Serbia got worse and came down to 106th position (it used to be ranked 90th in 2009; WEF). If we analyse the structure of IR spread, we can notice that there is room for decreasing the level of active IR in the area of country risk premium and funding spread. Pearson Correlation shows that IR has strong relation with return on assets and volume of collected deposits i.e. profit margin per product.

Keyword

  • banking sector
  • interest rates
  • base part
  • margin
  • credit rating
  • standard risk cost
  • country risk
access type Open Access

Financial Independence of Central Bank through the Balance Sheet Prism

Published Online: 30 May 2014
Page range: 37 - 59

Abstract

Abstract

The main reason for central bank independence lies in the fact that it is necessary to clearly distinguish spending money from the ability of making money. Independence of central banks is now a characteristic of almost all developed and highly industrialized countries. In this respect, it represents an essential part of the overall economic reality of these countries. Over the past decade or somewhat earlier, the issue of importance of central bank independence has been raised in developing countries, making the institutional, functional, personal and financial independence of central banks current topics for consideration. The key reason for the growing attention to financial independence of central banks is due to the effects of the global financial crisis on their balance sheets and therefore the challenges related to achieving the basic goals of the functioning of central banks - financial stability and price stability.

Financial strength and independence of central banks must be developed relative to the policy and tasks that are carried out and risks they face in carrying out of these tasks. Financial independence represents a key base for credibility of a central bank. On one hand, the degree of credibility is associated with the ability of central banks to carry out their tasks without external financial assistance. In order to enhance the credibility of central bank in this regard, it must have sufficient financial strength to absorb potential losses and that power must be continuously strengthened by increasing capital and rearranging profit allocation arrangements. This is particularly important in times of crisis.

Keywords

  • central bank
  • financial independence
  • independence indices
  • financial crisis
  • balance sheet
  • capital
  • profit allocation
  • budget management
access type Open Access

Optimal Banking and Other Financial Business for the Economic Growth of Serbia

Published Online: 30 May 2014
Page range: 61 - 83

Abstract

Abstract

The analysis of the banking / financial business impact on economic growth is a topic present in the world economy for centuries. In recent years, this topic has gained on importance in international economic circles. Actuality of the aforementioned impact particularly sparked the global economic crisis. In the focus of this paper is the impact of the level and speed of the financial development, particularly banking, on the economic growth in Serbia. Within the overall financial development, the focus is primarily dedicated to the banking business, which is still highly dominant segment of the financial sector in Serbia. We have conducted an analysis of the most important elements that have marked recent years` banking impact on the economic growth in Serbia. Actual characteristics of the aforementioned impact are also presented. Possible predictions of the banking / financial business movement in the future, as well as its impact on economic growth are presented in the paper. The focus is on determination of the optimal banking business volume for achieving sustainable economic growth in Serbia. The analysis presented in the paper indicate that there is significant potential for moderate and balanced growth of the banking / financial business in the medium term, which could make a significant contribution to the achievement of sustainable economic growth in Serbia, while providing financial stability. However, for the realization of this important and demanding goal, it is necessary to meet a significant number of factors and creation of the adequate conditions at the micro and macro level, essential for achieving the above mentioned aim.

Keywords

  • Banking Business
  • Financial Sector
  • Economic Growth
  • World Economic Crises
access type Open Access

Stress Testing of the Montenegrin Banking System with Aggregated and Bank-Specific Data

Published Online: 30 May 2014
Page range: 85 - 119

Abstract

Abstract

There are many different approaches to the process of stress testing and two of them will be investigated in this paper. The first one is a stress test performed on aggregated data i.e. the banking system as a whole. The variable of interest in both exercises is the Loan Loss Provision ratio (hereinafter: the LLP). The main goal of the thesis is to find an answer to the following question: what are the macroeconomic variables that influence LLP the most and how will LLP, as a variable of interest, behave in a situation when all these variables were to experience negative performance at the same time? The resilience of the banking system to such scenario will be tested through the capital adequacy ratio. In order to find out more about the management practices of banks, microlevel data on banks were also used in the analysis. The focus was to see which of the variables are able to explain the LLP ratio for each bank individually and how is this information helpful for possible improvements in the banking sector. The relations between these variables will be able to explain some of the banks’ losses and some of the banks’ practices regarding credit activities. The analysis there will provide for some recommendations for the banks but also for the Central Bank and its way to influence the practices in the banking sector.

Keywords

  • stress testing
  • loan loss provisions
  • estimation
  • credit risk
5 Articles
access type Open Access

Use and Limitations of the Reserve Requirement Policy in Montenegro

Published Online: 30 May 2014
Page range: 5 - 20

Abstract

Abstract

Since reserve requirement is the only monetary policy instrument used in Montenegro, it has been subject to frequent amendments since the global crisis outbreak. The analysis of the monetary demand model showed that there is an active transmission mechanism of change in the reserve requirement rate on the deposits trend reflects on lending activity. Also, there is a significant impact of FDIs on deposits trending in the banking system, as well as the positive impact of turnover on stock exchange on the deposits and loans trend. Finally, it was found that the financial crisis has caused negative trends in loans and deposits. On the other hand, the impact of changes in the reserve requirement on the economic activity in Montenegro could not be determined. This is primarily due to the fact that the transmission mechanism of the effect of reserve requirement on economic activity is too long to be able to estimate the model that does not allow the dynamics of the independent variables. The second reason is that industrial output index is only an indirect indicator of the economic activity.

Keywords

  • reserve requirement
  • monetary transmission mechanism
  • monetary demand model
  • credit expansion
  • Montenegrin banking system
access type Open Access

Assesment of the Interest Rates in the Serbian Banking Sector

Published Online: 30 May 2014
Page range: 21 - 35

Abstract

Abstract

Lending interest rates (IR) in the Serbian market are generally viewed as high. In accordance with the official NBS (National bank of Serbia) data for 2010: lending (IR) was 10.4% p.a., deposit IR was 4.2% p.a., and spread was 6.3% p.a. At the same time, IR on cross-border loans was 3.7% p.a. It means that the use of cross-border loans was a better solution for companies which were in position to take them. The indicator of IR spread in Serbia got worse and came down to 106th position (it used to be ranked 90th in 2009; WEF). If we analyse the structure of IR spread, we can notice that there is room for decreasing the level of active IR in the area of country risk premium and funding spread. Pearson Correlation shows that IR has strong relation with return on assets and volume of collected deposits i.e. profit margin per product.

Keyword

  • banking sector
  • interest rates
  • base part
  • margin
  • credit rating
  • standard risk cost
  • country risk
access type Open Access

Financial Independence of Central Bank through the Balance Sheet Prism

Published Online: 30 May 2014
Page range: 37 - 59

Abstract

Abstract

The main reason for central bank independence lies in the fact that it is necessary to clearly distinguish spending money from the ability of making money. Independence of central banks is now a characteristic of almost all developed and highly industrialized countries. In this respect, it represents an essential part of the overall economic reality of these countries. Over the past decade or somewhat earlier, the issue of importance of central bank independence has been raised in developing countries, making the institutional, functional, personal and financial independence of central banks current topics for consideration. The key reason for the growing attention to financial independence of central banks is due to the effects of the global financial crisis on their balance sheets and therefore the challenges related to achieving the basic goals of the functioning of central banks - financial stability and price stability.

Financial strength and independence of central banks must be developed relative to the policy and tasks that are carried out and risks they face in carrying out of these tasks. Financial independence represents a key base for credibility of a central bank. On one hand, the degree of credibility is associated with the ability of central banks to carry out their tasks without external financial assistance. In order to enhance the credibility of central bank in this regard, it must have sufficient financial strength to absorb potential losses and that power must be continuously strengthened by increasing capital and rearranging profit allocation arrangements. This is particularly important in times of crisis.

Keywords

  • central bank
  • financial independence
  • independence indices
  • financial crisis
  • balance sheet
  • capital
  • profit allocation
  • budget management
access type Open Access

Optimal Banking and Other Financial Business for the Economic Growth of Serbia

Published Online: 30 May 2014
Page range: 61 - 83

Abstract

Abstract

The analysis of the banking / financial business impact on economic growth is a topic present in the world economy for centuries. In recent years, this topic has gained on importance in international economic circles. Actuality of the aforementioned impact particularly sparked the global economic crisis. In the focus of this paper is the impact of the level and speed of the financial development, particularly banking, on the economic growth in Serbia. Within the overall financial development, the focus is primarily dedicated to the banking business, which is still highly dominant segment of the financial sector in Serbia. We have conducted an analysis of the most important elements that have marked recent years` banking impact on the economic growth in Serbia. Actual characteristics of the aforementioned impact are also presented. Possible predictions of the banking / financial business movement in the future, as well as its impact on economic growth are presented in the paper. The focus is on determination of the optimal banking business volume for achieving sustainable economic growth in Serbia. The analysis presented in the paper indicate that there is significant potential for moderate and balanced growth of the banking / financial business in the medium term, which could make a significant contribution to the achievement of sustainable economic growth in Serbia, while providing financial stability. However, for the realization of this important and demanding goal, it is necessary to meet a significant number of factors and creation of the adequate conditions at the micro and macro level, essential for achieving the above mentioned aim.

Keywords

  • Banking Business
  • Financial Sector
  • Economic Growth
  • World Economic Crises
access type Open Access

Stress Testing of the Montenegrin Banking System with Aggregated and Bank-Specific Data

Published Online: 30 May 2014
Page range: 85 - 119

Abstract

Abstract

There are many different approaches to the process of stress testing and two of them will be investigated in this paper. The first one is a stress test performed on aggregated data i.e. the banking system as a whole. The variable of interest in both exercises is the Loan Loss Provision ratio (hereinafter: the LLP). The main goal of the thesis is to find an answer to the following question: what are the macroeconomic variables that influence LLP the most and how will LLP, as a variable of interest, behave in a situation when all these variables were to experience negative performance at the same time? The resilience of the banking system to such scenario will be tested through the capital adequacy ratio. In order to find out more about the management practices of banks, microlevel data on banks were also used in the analysis. The focus was to see which of the variables are able to explain the LLP ratio for each bank individually and how is this information helpful for possible improvements in the banking sector. The relations between these variables will be able to explain some of the banks’ losses and some of the banks’ practices regarding credit activities. The analysis there will provide for some recommendations for the banks but also for the Central Bank and its way to influence the practices in the banking sector.

Keywords

  • stress testing
  • loan loss provisions
  • estimation
  • credit risk

Plan your remote conference with Sciendo