Event Title

COVID-19’s Impact and Implications to Financial System

Session

Management, Business and Economics

Description

The COVID-19 pandemic could be one of the most serious challenges faced by the financial services industry in nearly a century. The impact of COVID-19 on banks has exposed several gaps in business and operating models, fall in demand, lower incomes, production shutdowns - and will adversely affect the business of banks. This report tend to define banks’ response to the COVID-19 crisis, the focus must be on drawing up a strategy built on the three pillars of resilience, value leadership and growth to drive fundamental transformation and future-proof to weather such storms, going forward. To address the COVID-19 impact on banking, overcome challenges created by the crisis, and emerge stronger, financial institutions must craft a strategic response for effectively managing the risk by adopting the appropriate digital technology enablers and innovations underpinned by agile delivery models. Given risk management becomes especially important during a crisis to retain customer trust and ensure financial stability, accurately assessing the COVID-19 impact on risk management in banks is key. Banks must define a strategy covering changes to risk management methodologies, processes, and systems while focusing on the following areas: operational resilience, enterprise stress testing and scenario analysis, cost and efficiency optimization, risk and finance alignment and quantifying financial risk.To determine the impact of COVID 19 to the bank performance we will measure different indicators of banking sector development, with main focus on the expected credit losses ratios as banks are increasing loan loss provisions to face a potential surge in bad loans, increased credit risk defaults and lower recoveries, reduced cash inflows from loan repayment, fair value losses due to increased credit spreads and reduced profit levels. Empirical results will show as how COVID 19 affect banking sector development in Kosovo. The time series from 2015 until June 2020 will be used as a comparison period.

Keywords:

Financial system, COVID 19, Loans, Credit risk, banking sector

Session Chair

Bashkim Nurboja

Session Co-Chair

Florin Aliu

Proceedings Editor

Edmond Hajrizi

ISBN

978-9951-437-96-7

Location

Lipjan, Kosovo

Start Date

31-10-2020 3:15 PM

End Date

31-10-2020 4:45 PM

DOI

10.33107/ubt-ic.2020.282

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Oct 31st, 3:15 PM Oct 31st, 4:45 PM

COVID-19’s Impact and Implications to Financial System

Lipjan, Kosovo

The COVID-19 pandemic could be one of the most serious challenges faced by the financial services industry in nearly a century. The impact of COVID-19 on banks has exposed several gaps in business and operating models, fall in demand, lower incomes, production shutdowns - and will adversely affect the business of banks. This report tend to define banks’ response to the COVID-19 crisis, the focus must be on drawing up a strategy built on the three pillars of resilience, value leadership and growth to drive fundamental transformation and future-proof to weather such storms, going forward. To address the COVID-19 impact on banking, overcome challenges created by the crisis, and emerge stronger, financial institutions must craft a strategic response for effectively managing the risk by adopting the appropriate digital technology enablers and innovations underpinned by agile delivery models. Given risk management becomes especially important during a crisis to retain customer trust and ensure financial stability, accurately assessing the COVID-19 impact on risk management in banks is key. Banks must define a strategy covering changes to risk management methodologies, processes, and systems while focusing on the following areas: operational resilience, enterprise stress testing and scenario analysis, cost and efficiency optimization, risk and finance alignment and quantifying financial risk.To determine the impact of COVID 19 to the bank performance we will measure different indicators of banking sector development, with main focus on the expected credit losses ratios as banks are increasing loan loss provisions to face a potential surge in bad loans, increased credit risk defaults and lower recoveries, reduced cash inflows from loan repayment, fair value losses due to increased credit spreads and reduced profit levels. Empirical results will show as how COVID 19 affect banking sector development in Kosovo. The time series from 2015 until June 2020 will be used as a comparison period.