Almir ALIHODŽIĆ (almir.dr2@gmail.com)
University of Zenica, Faculty of Economics Zenica, Bosnia and Herzegovina
İbrahim Halil EKŞİ (eksihalil@gmail.com)
Professor, University of Gaziantep, Faculty of Economics and Administrative Sciences
Berna DOĞAN (dogan.brn@gmail.com)
University of Gaziantep, Faculty of Economics and Administrative Sciences
Abstract
Financial stability is a situation in which a financial system can absorb shock without significant disturbances in its current and future functioning and which has no negative impact on the economy. After 2007 global crisis, the importance of bank stability better understood. This paper investigates the determinant of bank stability in selected Balkan countries and Turkey. For this aim, we used to Z-score and NPL as dependent variables. We used bank performance, financial structure and macro variables as independent variables. According to ANOVA test and regression analysis, the strongest correlation between non-performing loans as the dependent variable of the Western and some EU Member countries (Bosnia and Herzegovina, Serbia, Croatia, Slovenia, Montenegro, Macedonia) and Turkey was achieved with the following independent variables: the total non-interest income to total income and foreign bank assets to total bank assets. Observed on the other hand, the weakest link between NPLs as a dependent variable was achieved with the following independent variables: the gross domestic product, the net interest margin ratio, Lerner index and the cost to income. Another dependent variable, i.e. Z-score was recorded the strongest correlation with the following independent variables in the model: the gross domestic product, the Lerner index, the net interest margin and the cost to income. The weakest link was achieved with the following independent variables: the total non-interest income to total income and the foreign bank assets to total assets. The survey covers the period from 2006-2017 as yearly. Therefore, through a multiple regression analysis, non-performing loans and Z-Score to changes in endogenous variables will be tested.
Keywords: Financial stability, Lerner index, economic activity, Z-Score.
JEL classification: G2, G17, G21.
