Banking Sector In Kosovo Research Articles

Examining the impact of internal marketing strategies on employee-based brand equity benefits

PurposeThe primary purpose of this research is to conceptualise and validate the comprehensive framework for effectively measuring and managing employee-based brand equity (EBBE) benefits. The study endeavours to integrate professional and socio-emotional facets of employees' into the proposed model, lending it a more holistic approach.Design/methodology/approachThe study focusses on the banking sector in Kosovo, employing structural equation modelling to analyse data from a sample of 325 employees.FindingsBoth professional and socio-emotional perspectives significantly influenced brand knowledge, positively impacting EBBE benefits such as employee satisfaction, retention and positive word of mouth (WOM). These findings provide empirical support for the theoretical assumptions concerning the role of professional and socio-emotional perspectives in building EBBE.Research limitations/implicationsTheoretically, this research could bridge marketing and organisational behaviour theories by highlighting employees' role in building brand equity. Moreover, it might expand the social identity theory within an organisational context, emphasising employees' identification with the brand as a crucial element.Practical implicationsThe study offers practical implications for the banking industry and similar contexts, suggesting robust internal marketing strategies prioritising professional development and socio-emotional connectivity. Theoretically, this research could bridge marketing and organisational behaviour theories by highlighting employees' role in building brand equity. Moreover, it might expand the social identity theory within an organisational context, emphasising employees' identification with the brand as a crucial element.Originality/valueThe paper presents an original contribution to the field of brand equity research by proposing and validating a novel framework for EBBE that uniquely integrates both professional and socio-emotional dimensions of employees' experiences. This approach is particularly innovative within the context of the banking sector, offering new empirical insights.

The role of foreign direct investments in the developing of banking sector

The important factor of a stable economy undoubtedly remains foreign direct investment (FDI), which helps in the establishment and economic, social and overall development of a country. Corporations that decide to invest their capital abroad of the country of origin, obviously require the destination country to have an organizational economic viability and attractive and suitable legal space. Meanwhile, the factors that affect the size, structure, benefits, costs and role of the banking sector of FDI in the economy of Kosovo will be objects of analysis of this paper. In addition to these issues, we will present the real situation of FDI in general during the last years in Kosovo, the origin of the respective countries from which these investments come and their economic activity scope. For the writing of this paper, the method of secondary data analysis and comparative method were used. Mainly, we have used the publications of the Central Bank of Kosovo (CBK), such as Financial Stability Reports and Monthly Information Reports of the Financial System. In this paper, it is concluded that FDI makes the main contribution to the development of the banking sector in Kosovo as well as in developing countries.

The influence of internal factors on loan risk management - Case study commercial banks of Kosovo

The main purpose of this study is to empirically analyse key internal factors influencing loan risk management of Kosovo’s commercial banks. This research adopts parametric statistics and employs a multilinear regression model. The data used for the analysis covers 7 banks for the 12 years from 2008 to 2019. The dependent variable is credit risk measured by dividing total debt by total assets. The independent variables are the size of the bank, the ratio of non-performing loans, the capital adequacy ratio, the debt-to-capital ratio, and asset management. The hypotheses raised in this research were tested through the SPSS software package using quantitative methodology. The results obtained through multiple linear regressions have shown that credit risk is positively correlated and statistically significant with non-performing loans and debt-to-equity ratio and statistically significant and negatively correlated with bank size, capital adequacy, and asset management. Considering our results, it can be considered that Kosovo’s commercial banks have performed very well so far by assessing internal factors that impact credit risk. The findings of this research have direct practical implications for the banking sector in Kosovo regarding the credit risk management approach because it can be used further to enhance the effectiveness of using proper mechanisms and regulations to minimize credit risk exposure.

Analysis of the Banking Sector Competition in Kosovo

Abstract This research paper aims to investigate the competition in the banking sector in Kosovo. For the research purpose, the secondary data from the Central Bank and commercial banks of Kosovo are used. Besides, the comparison methodology is used to analyse the banking sector for the years 2013-2017. The participation of commercial banks in the banking sector in Kosovo was compared and described, and the competitiveness of the banking sector was measured, using the HHI index and Concentration Ratio (CR4). Based on the research results, we can conclude that the competitiveness in 2017 was at a moderate level, in 2016 at a low level. Whereas, in the previous years, there was no real competition in this sector.

Determinants of bank’s net interest margins in Kosovo

The aim of this paper is to investigate internal and external determinants that impact the Net Interest Margin (NIM). The paper employs an OLS-PSCE procedure using quarterly Panel Data (From March 2013 to December 2019) for commercial banks in Kosovo. Results suggest that the Net Interest Margin is the banking sector in Kosovo is mostly influenced by factors within the bank such as: Loan-to-Deposit Ratio; Operation Costs and Fee Income, but less affected by external factors besides inflation. In addition, results suggest that external factors do not influence the net interest margin; therefore, a governmental policy intervention might not have an impact on Net Interest Margin. The results of the research are important for commercial banks in Kosovo, since they can help improve the efficiency through the internal and external indicators that are impacting the NIM.

Importance of Corporate Governance: Evidence from Kosovo’s Banking Sector

This study identifies and assesses the impact and effect of corporate governance (CG), as a good practice mechanism, as well as some specific financial indicators on the performance of the banking sector in Kosovo. The data used in the research are defined as secondary data that include nine (9) commercial banks and cover the period 2013–2020. The analysis applied to data processing is the dynamic approach through 2SLS estimation for the dependent variables ROA, ROE, and NIM. The results obtained at the end of the study show that all variables applied in this research, depending on the variable defined for evaluation, have a significant impact on the performance of the banking sector. The results also show that the most adequate measure for assessing a bank’s performance is the net interest margin (NIM). This research paves the way for debate and discussion on the governing structures of financial institutions and policymakers.

Determinants of Credit Risk in Commercial Banks of Kosovo

Purpose: The purpose of this paper is to analyze some of the determinants of credit risk in commercial banks in Kosovo through the use of regression analysis for a dataset covering a time series of 7 years (2012 - 2018). Design/Methodology/Approach: The data have been collected from publications of Central Bank of Kosovo and from Kosovo Agency of Statistics The data have been analyzed on quarterly basis. In order to conduct the empirical part of the study that gives us the answer to the relationship between credit risk and the determinants of this risk, we analyzed 6 variables in the study. To perform the necessary analysis we have used the statistical software SPSS 23. Through the regression analysis, the main findings and results of the study were generated. Findings: After analyzing the necessary data, the paper concludes that, among credit risk determinants, interest rates on loans and profitability of banks (ROA) have the largest and most significant impact on credit risk, namely non-performing loans as the credit risk measure. Practical implications: For researchers and academics, the study provides a useful basis on which further studies on credit risk and the factors that cause this risk can be conducted. Originality/Value: The research paper is based on recent studies that assess credit risk in other countries and use reliable data on the banking sector in Kosovo.

BASEL III LIQUIDITY RISK AND KOSOVO BANKING SYSTEM

The financial crisis 2007-2009 prompted the Basel Committee on Banking Supervision (BCBS) to intensify its efforts to strengthen the principles and standards for capital, as well as for the measurement and management of liquidity risk. Risk management is very important in the financial system, especially in banks. Among various risks Banks face is a liquidity risk it’s managing enables Banks to fulfil their obligationsBasel III consists of set of measures internally agreed. The implementation of Basel III will considerably increase the quality of banks' capital and significantly raise the required level of their capital. In addition, it will provide a "macro prudential overlay" to better deal with systemic risk.Like all Basel Committee standards, Basel III standards are minimum requirements which apply to internationally active banks. Members are committed to implementing and applying standards in their jurisdictions within the time frame established by the Committee.To ensure that banks have sufficient liquidity to survive potential liquidity shocks, as happened few years ago, the Basel Committee has issued two new globally revised minimum standards under the Basel III rules for the first time in the banking history: LCR – Liquidity Coverage Ratio and NSFR – Net Stable Funding Ratio that contain new requirements for bank capital, as well as standardized rules in the liquidity area.Banks need to fully comply with LCR and NSFR rules by January 1, 2019, according to the Capital Requirements Directive & Capital Requirements Regulation (CRD IV & CRR) rules.Basel III rules, in the European Union attain their applicable judicial form through REGULATION (EU) No 575/2013. The regulatory package is due to enter into force on January 1st, 2014, but some provisions will be implemented gradually between 2014 and 2019 and will fully come into force on January 1st, 2019. But these rules are likely to undergo some revisions due to a proposal by European Union (EU), so implementation horizon could go being beyond 2019.Performance of the Kosovo banking sector continued to be positive, thus contributing in maintaining the financial and economic stability of the country. Kosovo’s financial system continues to be characterized with sustainable increase in all its constituent sectors. The banking sector in Kosovo as most successful story is developed by many international institutions, characterized by a large presence of foreign capital, where 89. 2% of all assets are managed by foreign banks and development is based on international standards.Banking sector continued to have good liquidity position, with the main liquidity indicators standing above the minimal level as a required by the regulation.The implementation of Basel III rules in Kosovo related to liquidity depends on the local regulator and Basel III standards.

Management of Liquidity Risk and the Banking Activity

The banking sector in Kosovo continues to have a high level of sustainability and financial stability. Two substantial components for the stability of the banking system appear to be liquidity and liquidity risk. The purpose of this paper is to analyze liquidity management in Kosovo's commercial banks through liquidity risk indicators from 2008 to 2017. By comparing the methodology of the data presented, the study will assess the state of management of the liquidity risk of commercial banks. From 2008 until now, commercial banks in Kosovo have had liquidity reserves at a level higher than the level required by CBK, which means that exposure to liquidity risk was minimal.

The Effect of Capital Adequacy on Returns of Assets of Commercial Banks in Kosovo

The purpose of this study is to analyze the effects of capital adequacy on the return of assets to the banking sector in Kosovo. The capital adequacy ratio measures the ability of a financial institution to meet its liabilities by comparing its capital with its assets. As the banking system is one of the strongest points of our country's economy, it is understood that the capital adequacy ratio is used by banks to determine the adequacy of their capital holdings while taking their risk exposures into account.This study will provide empirical evidence of the relationship between capital adequacy and return on commercial bank assets in Kosovo during 2008-2017. It will be using secondary data obtained from audited reports of domestic banks and reports from the Central Bank of Kosovo. To measure the empirical results during this research, these econometric methods have been used: the linear regression model, the model of the fixed effects, and the random model and the GMM model. Based on the results we can conclude that capital adequacy has a positive impact on asset returns and has a significant relationship. In addition, other factors have had a positive and negative impact on the return of commercial banks' assets in Kosovo. Keywords: capital adequacy, return on assets, loans, deposits, interest rates.JEL Classification: G21, G31, G32

Corporate Governance in the Banking Industry of Kosovo

The main purpose of this research is to study the impact of corporate governance on the financial performance of the banking sector in Kosovo. To analyze this impact, the Pearson correlation coefficient, multiple regression analysis related to the board size and board independence and banking sector performance in Kosovo were applied. The key corporate governance variables that have been studied in this research are: (i) size of the board of directors, (ii) the independence of the board of directors (the ratio between non-executive directors and the total number of board members). The data for this research were collected from the annual reports and audited financial statements of commercial banks in Kosovo for the 12 year period (2006-2017) and from questionnaires addressed to board members of commercial banks in Kosovo as well as other publications from relevant local institutions such as the Central Bank of Kosovo (CBK), Statistical Office of Kosovo (SOK), Tax Administration of Kosovo (TAK), etc. The results of the multiple regression analysis regarding the influence of the board of directors on the financial performance of the banking sector indicate that: the size of the board of directors and the independence of the board of directors have a positive and significant impact on the financial performance of the banking sector in Kosovo, expressed through return on assets (ROA) and return on equity (ROE). Findings of this research are in line with the findings of other researchers in this field and confirm the assertion that the management of the above variables improves and has a positive impact on the financial performance of banks in Kosovo.

IMPACT OF MACROECONOMIC AND BANKING FACTORS ON THE LEVEL OF NON-PERFORMING LOANS IN THE BANKING SECTOR IN KOSOVO

IMPACT OF MACROECONOMIC AND BANKING FACTORS ON THE LEVEL OF NON-PERFORMING LOANS IN THE BANKING SECTOR IN KOSOVO

DETERMINANTS OF COMMERCIAL BANKS PROFITABILITY THROUGH ANALYSIS OF FINANCIAL PERFORMANCE INDICATORS: EVIDENCE FROM KOSOVO

The purpose of this study is to elaborate whether the determinants of commercial banks’ profitability affect the financial performance of commercial banks in Kosovo. Performance evaluation of commercial banks in Kosovo is done through measurement of financial performance indicators such as Return on Average Equity (ROAE), Return on Average Assets (ROAA) and Net Interest Margin (NIM). The study identifies the main factors that affect the profitability of commercial banks through analysis of financial time series and panel data of the banking sector in Kosovo. The study presents three models of financial performance analysis which highlight the influencing factors. The models are based on regression analysis, and the obtained results emphasize the relationship between the determinant factors of commercial banks profitability expressed through analysis of financial performance indicators. The study concludes that commercial banks profitability in Kosovo is driven mainly by internal determinant factors such as capital adequacy, asset quality and management efficiency, while macroeconomic factors have insignificant impact on financial performance of commercial banks.

Interest Rates on Deposits and Loans: Kosovo Banking System 2012-2015

Kosovo’s sluggish economic growth and financial market developments are two main reasons for conducting the analysis of banking system interest rates in Kosovo. It has been always considered that increase in the number of banks will in turn result in higher competitiveness; however this did not happened and the interest rates have only seen increase. As a result of this situation, poor access to loans continues to severely hamper the household and business economic activities in Kosovo. Despite rapid development of banking sector in Kosovo that was built since 2000 and which is considered as one of the most successful ones in Kosovo’s economy, the impact of micro policies and governmental policies, including the high interest rates, have reflected in sluggishness of entrepreneurial initiatives. Irrespective of a considerable number of banks operating today in Kosovo (10 banks), this sector remains quite concentrated, since around 90% of total assets, more than 88% of deposits and around 80% of loans are concentrated in three largest banks with foreign capital.

Effects of a Quality Management System on the Financial Performance in Banking Sector: Case Study Kosovo

Creating and improving the services quality, presses the financial institutions to make differentiation from the competition and better position in market for itself. The modern approach to quality management system in the financial and banking sector includes faith, activities which make the client satisfied and this is particularly true in the goodness and help the employees with whom customers will come in contact giving accurate and clear information, discipline and long-term approach. The objective of this study was to establish the effect of quality management system on financial performance in the Kosovo banking sector. At the same time, the concept of quality as a rule leads to confusion and misinterpretation, because it is difficult to determine its exact meaning. The quality of the product or service is the first and often the last thought of the people, when they talk about quality. The concept of quality as an indicator of fulfilling the requirements of the standards or level of excellence is part of advertising, when it comes to their product or service. In tackling the problem, we used empirical methods, which will enable us a correct result of our paper. The results of the paper does not result in significance between banking services and performance of the banking sector in Kosovo.

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

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.

Stress Testing of Credit Risk: Case Based on Loan Portfolio, Capital Adequacy and Non Performing Loans in Kosovo

Nowadays the financial stability of the banking sector is a very controversial topic especially the assessment of the right quantity of capital that banks must set aside to be protect against various types of risks with which has to do the banking sector, it presents a big challenge. One of techniques that help to bring answer on the question whether a special bank or banking sector has a sufficient capital in case of crisis is a stress testing. So the stress testing analysis represents an important tool of sustainable assessment of the banking sector towards possible shocks on credit portfolio and on liquidity position, which can resulting from unfavorable economic development and changes on market conditions. Stress testings of the sensitivity of financial institutions towards macroeconomic shocks are a valuable assistance in the assessment of the economic stability. They allow an predictive analysis and an uniform approach for the identification of potential risks of the banking system in general. The results of the analysis for stress testing that are made for the banking sector in Kosovo suggest satisfied abilities of this sector to meet unexpected situations of exposure toward possible risks. Although banks are facing with many risks, the credit risk which will be treated in this study aloud a great weigh. This study has an intent to determine macroeconomic factors that have impact in quality of loan portfolios. Through the study we would present an analysis of financial situation in connection with the impending level of nonperforming loans, proceedings that are taken to reduce or to keep at sustainable level, also will be evaluated.The vulnerability of the banking sector toward sector risk as much as we have information on the macroeconomic level and to determine the indicators that warning the early worsening in the quality of loan portfolio. Also through stress scenarios we could understand what will happen in different situations with non performing loans.

The Investment and Net Interest Margin: Case Study Commercial Banks in Kosovo

In Kosovo, but in all developing countries, the foreign investment is the locomotive of the country that considered as the most important economic sectors. In general it can be concluded that most of the investment originates from developed countries and that these investments return to these places. Origin of investments in Kosovo mainly comes from countries such as Austria, Germany, Slovenia, Great Britain, Switzerland, Turkey, the Netherlands, Albania, Serbia, USA, France, Macedonia, Croatia, Cyprus, Norway, Italy, Greece etc. The banking sector in Kosovo has been very attractive to the foreign investors. A total of nine commercial banks, seven are foreign owned. Foreign investments are primarily generated as investments in shares of foreign shareholders from different countries of the world. Investments in securities have increased by the banking sector in 2014. With the change of the interest rate it has also changed net interest margin of the banking sector. Interest on loans and deposits has continued to decline. Especially interest rates on deposits in 2014 have fallen to 1. 1%. This linked to the investment bank in securities of our government as the initiator in this area but cannot be denied to the investment of foreign governments. With the decrease of credit interest rate will be the development of sustainable economic growth and boost investment.

Performance of Foreign Banks Operating in Kosovo – ProCredit Bank Kosovo - Raiffeisen Bank Kosovo & NLB Prishtina

In this paper we analysed the indicators of performance of banks with foreign capital operating in Kosovo. According to many theses of different authors worldwide, more accurate measurement of bank performance is based on application of main financial coefficients of banks such as: Return on Assets – ROA, Return on Equity – ROE and Cost/Income Ratio - C/I. This thesis describes the analyses of financial indicators for 2006-2007-2008-2009-2010-2011 and 2012 periods. The thesis contents five parts (chapters), the second part provides a literature review on the performance of banks in other countries. Third part provides a general analysis of the banking sector in Kosovo. Fourth part presents the results of financial coefficients analyzed. While fifth part presents financial analysis and provides the main conclusions. As sample for realizing this thesis are obtained the financial coefficients of three main commercial banks in Kosovo with foreign capital shareholders: Procredit Bank (former -MEB – Micro Enterprise Bank), Raiffeisen Bank (former - American Bank of Kosova) and Nova Ljublanska Banka, NLB Prishtina (established with the acquisition of two earlier banks Kasa Banka and New Bank of Kosova-BRK). DOI: 10.5901/ajis.2014.v3n2p57