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Abstract
Investigating the quality of banking sector assets is very challenging, continuously adapting, complex, and significant. The quality of assets significantly affects the overall performance of the banking sector. Hence, it is necessary to manage the asset quality of the banking sector as effectively as possible. Bearing that in mind, this paper analyzes the dynamics of asset quality in the banking sector in Serbia based on the LMAW-DNMA method. According to the results of the LMAW-DNMA method, the best asset quality of the banking sector in Serbia was achieved in 2013 and then in 2011, 2016, 2012, and 2014. The unfavorable quality of the assets of the banking sector in Serbia in the period 2019-2021 was affected by the COVID-19 pandemic by causing a decline in economic and thus credit activities, and to a large extent prolonging the repayment of credit obligations. In 2022 and 2023, a slight improvement in the quality of banking sector assets in Serbia was recorded. Therefore, it is necessary, among other things, to manage credit risks as efficiently as possible and, consequently, to carry out an adequate distribution of available loans to the economy, sectors, and the population to achieve the target quality of assets of the banking sector in Serbia.
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