The Main Determinants of Bank's Stability. Evidence from Romanian Banking Sector

Abstract

Through this paper we aim to identify the main determinants of a bank's stability and if the differences between commercial and co-operative banks. Co-operative banks, were not analysed in great detail in the financial literature as opposed to credit unions or even commercial banks. Both commercial and co-operative banks represent credit institutions that use different approaches for their core operational processes. Taking into consideration these specific characteristics, we want to identify if there are any differences among the main determinants of their financial stability. At the end of our analysis, we could draw the conclusion that the models we tested were fitted only for co-operative banks, while for commercial banks we didn’t identify any significant factors, between the selected variables. Thus, the financial stability of co-operative banks is mainly influenced by two factors represented by GDP growth and interbank offering rate for 3 months.