Event Title

Restructuring of Banking Systems

Session

Management, Business and Economics

Description

Since 2008 banks have operated in markets characterized by negative yields, which negatively impacted banks' profitability and reduced net interest margins, especially institutions dependent on maturity transformation and net interest income. In the wake of the earlier financial crisis in 2008, there was also an urgent need for strict regulatory control, which was very useful in the current context. At the same time, however, stricter rules have reduced the competitiveness of banks compared to bank surrogates.

The pandemic crisis comes as an additional burden on the problems banks have faced over the past years due to some trends that have meant increasing competitive pressure on banks. Though Kosovo banks have continued to operate successfully through pandemic crises, besides dealing with un-precedent situations, the Covid-19 turmoil is likely to have the effect that interest rates will remain low for much longer. Although banks will benefit from being the liquidity support channel and have access to central bank support in the short term, the profound crisis affecting the real economy will likely lead to a new surge in non-performing loans and rising unemployment.

Though the application of high capitalization of banks since 2009 and stress tests that affected the banks to enter the crisis with sound capital and relatively liquid, the size and duration of the situation are likely to exacerbate this due to overcoming predicted in many stress tests performed so far.

Although the Covid-19 crisis has triggered policy responses to stimulate lending to the real economy while safeguarding the banking sector in the short term, deep restructuring of banking systems will be necessary for the medium term.

Given the financial sector's significant challenges from pandemic crises, this study will examine Kosovo's banking strategies implemented during the pandemic crisis and the impact and implication of banking business systems for the future.

Keywords:

Banking, financial system restructuring, financial crisis, Kosovo.

Proceedings Editor

Edmond Hajrizi

ISBN

978-9951-550-47-5

Location

UBT Kampus, Lipjan

Start Date

30-10-2021 12:00 AM

End Date

30-10-2021 12:00 AM

DOI

10.33107/ubt-ic.2021.495

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Oct 30th, 12:00 AM Oct 30th, 12:00 AM

Restructuring of Banking Systems

UBT Kampus, Lipjan

Since 2008 banks have operated in markets characterized by negative yields, which negatively impacted banks' profitability and reduced net interest margins, especially institutions dependent on maturity transformation and net interest income. In the wake of the earlier financial crisis in 2008, there was also an urgent need for strict regulatory control, which was very useful in the current context. At the same time, however, stricter rules have reduced the competitiveness of banks compared to bank surrogates.

The pandemic crisis comes as an additional burden on the problems banks have faced over the past years due to some trends that have meant increasing competitive pressure on banks. Though Kosovo banks have continued to operate successfully through pandemic crises, besides dealing with un-precedent situations, the Covid-19 turmoil is likely to have the effect that interest rates will remain low for much longer. Although banks will benefit from being the liquidity support channel and have access to central bank support in the short term, the profound crisis affecting the real economy will likely lead to a new surge in non-performing loans and rising unemployment.

Though the application of high capitalization of banks since 2009 and stress tests that affected the banks to enter the crisis with sound capital and relatively liquid, the size and duration of the situation are likely to exacerbate this due to overcoming predicted in many stress tests performed so far.

Although the Covid-19 crisis has triggered policy responses to stimulate lending to the real economy while safeguarding the banking sector in the short term, deep restructuring of banking systems will be necessary for the medium term.

Given the financial sector's significant challenges from pandemic crises, this study will examine Kosovo's banking strategies implemented during the pandemic crisis and the impact and implication of banking business systems for the future.