The Evolution of Romania's Financial and Banking System

Abstract

In this paper I analyzed Romania's banking system evolution in the period 2000 – 2012, through a research both theoretical and empirical. The database is collected from monthly Reports of National Bank of Romania and is classified into categories as follows: key prudential indicators, banking risk information, loans and commitments granted by banks, loan portfolio classification and key ratio for minimum reserves. Afterwards, those indicators are framed through CAMELS approach. The research period was divided into pre-crisis period - before 2007 and post-crisis period - after 2007 and up to the present. The 2007 year was used as a crossroad point because starting with this year it was visible the downturn of the economic and financial evolution in Romania's system and also at global level. The research objectives are to observe the evolution of the banking system in Romania in the prior crisis period as well as after the crisis set in and to identify possible correlations and contagion effects of the selected indicators. Concluding, there are cross sectional influences between selected banking indicators which might gave us a warning signal regarding the evolution of the banking system.