Abstract
Economic transformation is still an ongoing process in many European countries. Despite common economic roots, the current economic situations are developing differently in different countries. This article will consider the process of economic transformation in terms of the banking sector. It aims to assess the level of banking stability throughout the transformation process in the Western Balkan region, and to assess the determinates of banking stability. A tool based on the Macroeconomic Stability Pentagon is used to estimate banking stability. The study finds that in most of the researched countries, the most common determinates of banking stability are market concentration and market competition. Additionally, it finds that the stability of banking systems in two countries – relatively the most transformed in the region (Croatia) and the one which is considered the most delayed (Serbia) – are influenced by similar factors, while the other banking systems in the region, despite common roots and experiences, vary in terms of the factors affecting their banking stability.
Highlights
Economic transformation is still an ongoing process in Europe which still is present in the research. (Åslund, 2018; Voicu et al, 2018)Many European countries are at different stages in their transition to a market economy
The study finds that in most of the researched countries, the most common determinates of banking stability are market concentration and market competition. It finds that the stability of banking systems in two countries – relatively the most transformed in the region (Croatia) and the one which is considered the most delayed (Serbia) – are influenced by similar factors, while the other banking systems in the region, despite common roots and experiences, vary in terms of the factors affecting their banking stability
Some of these countries originate from the same state – the former Socialist Federal Republic (SFR) of Yugoslavia, which means they have a common economic history and common current experience in building their statehood from scratch
Summary
Economic transformation is still an ongoing process in Europe which still is present in the research. Many European countries are at different stages in their transition to a market economy. Some of these countries originate from the same state – the former Socialist Federal Republic (SFR) of Yugoslavia, which means they have a common economic history and common current experience in building their statehood from scratch. These countries have long fought for their independence and sovereignty. SFR Yugoslavia was a federal republic, consisting of six provinces. Despite the relatively high average annual GDP growth rate, the Yugoslav economy struggled with the problem
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