Banks In Kosovo Research Articles

The impact of macroeconomic and bank internal factors on banking stability: Evidence from Kosovo banking sector

The impact of macroeconomic and bank internal factors on banking stability: Evidence from Kosovo banking sector

Creating a Factoring Service Specifically Designed for Small and Medium Enterprises at Pro Credit Bank in Kosovo

Over the course of ten years, Kosovo has implemented policy reforms and worked on establishing a diverse market economy. As a result, small and medium enterprises (SMEs) in Kosovo have experienced significant growth and have played a crucial role in generating employment opportunities, boosting the country's GDP, and increasing the volume of exports. Nevertheless, small and medium-sized enterprises (SMEs) have encountered obstacles in their path to growth as a result of their limited management expertise and financial means, as well as the unpredictability of the business landscape. Consequently, small and medium-sized enterprises (SMEs) frequently encounter challenges during their business activities. The creation of new financial services is of utmost importance, particularly for joint-stock commercial banks in Kosovo, as they face less competition compared to state-owned commercial banks. This need arises from Kosovo's integration and economic development requirements, particularly in the banking sector. Furthermore, factoring is a financial instrument that fulfills the criteria of both commercial banks and small and medium-sized enterprises (SMEs). This study aims to propose the implementation of factoring services as a highly efficient and valuable short-term financial instrument for small and medium enterprises (SMEs) in Kosovo. Additionally, it highlights the significance of factoring services for commercial banks in the region. The primary goal of the first chapter is to provide an introduction to factoring services, as well as a clarification of the conditions necessary for their development. The second chapter provides an overview of the current global factoring industry and the specific market conditions in Kosovo, in order to gain insight into the general conditions for the development of factoring services for Kosovo-based factors. The Kosovo factoring market is currently in its early stages of development. There are significant opportunities for the growth of this service in Kosovo, particularly for pioneers introducing it to the market. Unfortunately, PRO CREDIT BANK was unable to capitalize on being the first to enter the market. Despite the benefits of PRO CREDIT BANK in accessing reliable and high-growth external sources of the Kosovo economy, The small and medium-sized enterprises (SMEs) in Kosovo have had a significant growth rate of 3.8%. PRO Loans Bank has a strong track record of providing financial services to SMEs, which are its main customers. The bank has also established successful partnerships with international and global organizations to get additional capital for loans.

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 Significance of Corporate Governance: Insights from the Banking Industry in Kosovo

This research investigates the influence of corporate governance (CG) practices and specific financial indicators on the performance of Kosovo's banking sector from 2015 to 2022. The study uses secondary data from nine commercial banks and employs the Ordinary Least Squares (OLS) estimation method to assess their impact on Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). The findings highlight the significant impact of these variables on the banking sector's performance, with varying degrees of influence depending on the performance metric. Notably, NIM emerges as the most effective metric for evaluating a bank's overall performance, emphasizing the importance of managing interest margins effectively in the Kosovo market. These results have broader implications for discussions on governance structures within financial institutions and policy formulation. In Kosovo's banking sector, corporate governance has become pivotal for operational success and sustainability. This research offers valuable insights for stakeholders and policymakers by analyzing CG practices and their effects on key financial performance metrics.The dataset spans from 2015 to 2022, ensuring a comprehensive assessment of trends and developments within the banking sector. By employing the OLS estimation method, this study sheds light on the intricate relationship between corporate governance practices, financial indicators, and the sector's overall performance. In summary, this research comprehensively explores the interplay between corporate governance practices, financial indicators, and Kosovo's banking sector performance. The identification of NIM as a key performance metric underscores the importance of effective interest margin management. These findings have far-reaching implications, prompting critical discussions on governance structures within Kosovo's financial institutions for policymakers and industry leaders.

Impact of the Capital Adequacy on Bank Competition in the Kosovo Banking Sector

Sustainable growth, higher competitiveness, and a stable position should be the top mission of each bank during this century. Central banks are obliged to play their role by monitoring the banks on being sound and ensuring a stable economic system, by enforcing them to keep their CAR ratios well above the minimum required level. On the other hand, banks should increase their profit and competitiveness by orienting their investment more on low-risk products. Banks with high levels of capital will tend to possess outstanding performance and promote public confidence. However, the requirement for a higher capital ratio appears to be a barrier to rising competition. According to the various studies, macroeconomic factors and bank-specific factors both had a significant impact on the bank’s capital adequacy position. This study through the statistical regression shows the impact of the Capital Adequacy Ratio on bank competition. The results we have obtained prove that the capital requirement has a positive impact on increasing bank competition. Supported by the results, we advise banks to focus their investment on the market for highly rated instruments. By doing so, they may spark the next round of competition and be able to keep their capital adequacy ratios at the highest possible level, improving the soundness and stability of their institution.

An Empirical Analysis of Fintech's Impacts on the Financial Performance of Banks in Kosovo

This analysis aims to empirically investigate the impact of different forms of Fintech on the financial performance of banks in Kosovo from 2010 to 2021. The research is based on secondary data, accounting for 48 observations at quarterly frequencies. The model treats bank performance (i.e., net profits of the bank sector) as an endogenous variable of ATMs, POS, and e-payments. The methodology applied in the research is based on the OLS technique and diagnostic tests for evaluating the normality of distribution, multicollinearity, autocorrelation, specification error, and heteroscedasticity. Results show that the variability of ATMs and e-payments determines bank performance variability. In particular, e-payments show a significant positive impact on bank profitability, whereas ATM payments display a negative impact on bank profitability. In addition, an increase in ATM payments by 1% decreases bank profitability by 0.367%. While an increase in e-payments by 1% increases bank profitability by 0.11%. The POS payments were found to have no significant relationship with bank profitability. Doi: 10.28991/ESJ-2023-07-03-016 Full Text: PDF

Surviving Low Interest Rates Central Banks in Kosovo and Other Western Balkan Countries

Surviving Low Interest Rates Central Banks in Kosovo and Other Western Balkan Countries

The Role of Internal Audit in Credit Risk Management in Commercial Banks

This study focused on assessing the role of internal audit in credit risk management in commercial banks in Kosovo. Methodology: The methodology used was quantitative, involving data collection through a structured questionnaire for internal auditors and bank loan analysts in Kosovo. The survey aimed to gather information about their practices, adherence to Institute of Internal Auditors standards, and the organization’s credit risk management structure and responsibilities. The Chi-Square test was applied to test the hypotheses. Study Findings: Internal audit affects the reduction in credit risk and the definition of existing credit policies. Also, a positive relationship was found between bank size and the approach used in auditing, and the organisation of credit policies and credit risk management in commercial banks in Kosovo. Originality: Through this scientific paper we can present real and consistent results regarding the role of internal audit in credit risk management in commercial banks in Kosovo. Extracting data from the questionnaire and adhering to international standards on auditing leaves room to draw competent conclusions and recommendations in this area.

The impact of leadership styles on service quality and customer satisfaction: A comparative analysis between foreign and domestic capital banks in Kosovo

This study measured the impact of leadership styles on service quality and the impact of service quality on customer satisfaction. In addition, it analyzed whether there is a difference in service quality and customer satisfaction between banks by categorizing them by capital types. The quantitative method was used to achieve the objectives. The sample comprised 360 employees of Kosovo banks, where 99 employees were from banks with domestic capital, and 261 were from foreign capital banks. According to the OLS model, the authoritarian style has a more significant impact on the service quality in banks with foreign capital. In contrast, in banks with domestic capital, a transactional style significantly impacts service quality. According to the t-test, there is a statistically significant relationship between consumer satisfaction and banks with foreign and domestic capital, with the greatest consumer satisfaction in banks with foreign capital. However, considering the service quality, the t-test showed a non-significant result, which means that there is no difference in the service quality between the two categories of banks. This paper found that the leadership style has a higher effect on the service quality of the two categories of banks, recommending that banks fill the gap between the style used and the one that affects the service quality best. Banks also received feedback on customer satisfaction to strengthen SERVQUAL model components, improving service quality and increasing customer satisfaction. AcknowledgmentThe authors are grateful to AAB College for the support in preparing this paper.

The Effect of Digitalization on the Quality of Service and Customer Loyalty

This research aims to measure the effect of digitalization on service quality through the SERVQUAL model (tangibility, reliability, responsiveness, assurance, and empathy) and customer loyalty. Also, we analyze the relationship between customer loyalty and their demographics. A quantitative method was used to achieve the objectives through a structured questionnaire, where part of the research sample was 400 clients of Kosovo banks. Results show that digitalization positively affects service quality and customer loyalty based on the OLS model. According to the T-test, there was no significant difference in customer loyalty between the genders. There has been a significant difference in loyalty between clients’ ages following the one-way ANOVA test. According to the Kruskal Wallis test, it also resulted in a significant difference between levels of education. This study will provide banks with feedback on the importance of digitalization and its correlation with their customers’ quality of service and loyalty. In this form, they decide to make even greater investments in digitalization by satisfying customer demands and creating loyal customers. Doi: 10.28991ESJ-2022-06-06-04 Full Text: PDF

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.

Managing Credit Risk Strategies for Commercial Banks: The Case of Kosovo

The study aims to substantiate effective strategies to manage credit risks in commercial banks, for example, Kosovo. Based on the annual financial statements of commercial banks in Kosovo for 2010-2020. We built polynomial regression models to assess the impact of credit risk on the bank's financial stability. Empirically, determined and argued the different nature of the credit risks influencing the bank's financial stability according to various on the assets size of commercial banks. Preventive and reactive scenarios for minimizing the negative impact of credit risk on the financial stability of commercial banks in Kosovo have been determined using the constructed regression models. The results obtained are of practical importance and can help develop effective strategies for managing the financial risks in commercial banks in times of crisis and building up financial stability in stable conditions.

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.

Consumer evaluations of e-services

Purpose: This research integrates the perceived risk theory and the technology acceptance model to identify the consumer’s perception of risk toward electronic banking services. The main purpose of this research is to see how consumers perceive risk and its dimensions in creating attitudes and continuing to use electronic banking services. Methodology: To assess and measure customer perception, a questionnaire was adapted and distributed at branches of banks in Prishtina, which distributed the questionnaire to their customers. The confirmatory factor analysis and the regression analysis were performed in this study. Results: From the data obtained we can conclude that, compared to the risk components, the perception of benefits has a greater impact on consumer decision-making when using electronic banking services. Conclusion: This research has some implications. In theoretical terms, the findings provide a detailed perspective on the impact of risk components and benefits on attitudes and intention to use e-banking services. Whereas on the practical level, it provides recommendations for managers of commercial banks in Kosovo to create strategies and mechanisms aiming to increase security levels and consequently maximize customer trust in e-banking services.

Co-creating value and its impact on customer satisfaction and customer loyalty: A banking sector perspective

The application of co-creation is important and traditionally proves that banks that offer products and services without taking into account the opinions and recommendations of customers have the opportunity to remain focused on the bank and not be successful (Keshavarz & Jamshidi, 2018). In many organizations, especially those dealing with services, customer satisfaction is considered a challenge. Customer satisfaction influences customer loyalty and a loyal customer is a constant source of revenue, and satisfied customers do not focus on replacement products found on the market. From this, we conclude that customer satisfaction increases loyalty and reduces opposition to the products and services that the company offers (Jaakkola, Helkkula, & Aarikkula-Stenroos, 2015). This study aims to measure the impact of co-creation value through the DART (dialogue, access, risk assessment, and transparency) model on customer satisfaction and customer loyalty. The method used to answer the research questions is the quantitative method, where data were collected through primary research; the population of this study is the customers of all commercial banks in Kosovo, where the sample was 300 customers of randomly selected banks. Based on the research results, referring to Spearman’s rho correlation we conclude that co-creation with customer satisfaction and customer loyalty are in direct proportion. According to the ordinary least squares (OLS) model, we conclude that co-creation affects customer satisfaction and customer loyalty. Through this research, banking structures have the opportunity to increase customer satisfaction and create loyalty to customers through the co-creation process, strengthening its components such as dialogue, access, risk assessment, and transparency.

The dynamics of insurance sector development and economic growth

Through this paper, we were able to analyze the insurance system in Kosovo by looking at its structure, the degree of concentration of insurance companies in the insurance industry, and the types of products they offer. The analysis was based on statistical and qualitative data through the studies and analysis of insurance industry development in other countries. Furthermore, secondary data from the Central Bank of Kosovo, insurance companies, and the Insurance Association of Kosovo was used for the empirical analysis. Moreover, in order to obtain more data, one survey was conducted. The survey includes a more general audience, specifically employed people. The main research question of this study was whether insurance development has some effect on the financial markets in developing countries. The analysis conducted found that the insurance industry is important for the development of the financial markets in developing countries and also was mentation in research by Cristea, Marcu, and Cârstina (2014). Additionally, the analysis for the case of Kosovo shows that macroeconomic and financial sector-related factors are important drivers for the future development of the insurance industry in Kosovo. Therefore, macroeconomic, institutional, and regulatory environments are crucial for supporting the future growth of the insurance industry in Kosovo.

Role of foreign direct investment in banking sector and their impact on employment: Kosovo case

The purpose is to identify the role and importance of Foreign Direct Investment (FDI) for the Kosovo economy, emphasizing FDI in the banking sector and their impact on employment growth - comparing FDI levels with countries of the Western Balkans. Data processing design is in line with a focus on data published by local and international organizations and institutions, using methods deductive, comparing research data synthetically and analytically with direct access to literature, scientific journals, official reports published domestically and abroad. Kosovo aims to regulate favorable legal infrastructure by attracting as much FDI as possible to other countries in the region. In this context, in Kosovo the economic field is regulated by legal provisions covering the area of FDI, which is very favorable compared to other Western Balkan countries. This paper provides sufficient data to show the current state of FDI in Kosovo compared to the countries of the Balkan region, as well as the extent to which FDI has affected employment growth in the Kosovo banking sector. The practical implication also relates to identifying the improvement of positive legal conditions for more FDI attraction. The data in the paper present the real situation of FDI in Kosovo and their role in economic development, emphasizing the country's banking sector and how Kosovo stands for FDI relative to the Western Balkan countries.

Level of usage of income smoothing as a creative accounting tool by Balkan banks

The main objective of this study is to find out if Balkan banks use income smoothing (IS) as a creative accounting practice. The IS level is analyzed to see whether banks are focused on these practices as a tool to produce a better picture of financial views in the sight of decision makers. The data are provided from the audited financial reports presented on the banks’ web pages. Eckel’s modified equation was used to find out if banks use the technique of IS. As a result, the findings showed that banks use IS, and the factors that influence the use of this practice are analyzed. The factors studied are: age of banks, profitability, and loan provision. Of a total of seven banks in Kosovo, only three use income smoothing. In Albania, of a total of 11 banks, only one uses income smoothing. Surprisingly, the results show that none of the variables measured affect the usage of income smoothing. The study contributes to understanding the practice of IS on the one hand, and on the other hand, to opening the eyes of investors and depositors promoting vigilance when they make decisions about investing their funds in banks.

Impact of Non-Performing Loans on Bank s Profitability: Empirical Evidence from Commercial Banks in Kosovo

Impact of Non-Performing Loans on Bank s Profitability: Empirical Evidence from Commercial Banks in Kosovo

The commercial banks’ credit risk efficiency: Empirical evidence from Kosovo

Commercial banks' credit risk management is a function that focuses on events that may affect the achievement of objectives. Improper management will result in negative consequences or results. Therefore, banks usually pay more attention to events with a higher probability and impact of a direct loss of revenue and capital than events that may result in positive effects. This research adopts secondary data and seeks to analyze credit risk management of commercial banks in Kosovo through a developed DEA (Data Envelopment Analysis) model. The study covers seven commercial banks in Kosovo for the period 2008-2016 and uses Tobit regression to determine credit risk efficiency. The estimation results show a statistically significant positive relationship between bank efficiency, capital adequacy, and loans. Moreover, the study found that banks' efficiency factors, including profitability, deposits, costs, banks size, GDP growth, and inflation, are not statistically significant.