The Impact of Global Financial Crisis on the level of non-performing loans in commercial banks in Kosovo

Abstract

This research evaluates the performance of commercial banks in Kosovo, including the structure of nonperformingloans in the Kosovo banking system. The main findings in this paper come from the three largest banks inKosovo, indicating no significant statistical difference between them.The other findings come from two smaller banks in Kosovo, indicating that their situation has started deterioratingafter the global financial crisis.The research is based on financial indicators of commercial banks. These indicators results are available in theirfinancial statements published annualy on banks websites from 2006 to 2012.The loan portfolio in Kosovo commercial banks is identified as highly important – the main source of income inthe sector. However, the loan portfolio is also the main source of financial risk and bank’s reputation.The paper is organized around five sections.– Section 2 provides literature review on the performance of banks in other countries,– Section 3 provides an analysis of the banking sector in Kosovo and the macroeconomic indicators during theperiod analyzed,– Section 4 presents the results of analyzing the financial ratios,– Section 5 presents financial analysis and provides key conclusions,– Section 6 presents an overview of the research and provides the main conclusions.