Vol 2, No 1 (2014)
Modeling financial stability: the case of the banking sector in Macedonia
Jasmina Popovska
Abstract
The global financial crisis from 2007-2009 has additionally emphasized the necessity of paying special attention to the financial system stability, especially to the stability of banking system. In Macedonia, the effects of the crisis were felt during 2008-2009, and the National Bank of the Republic of Macedonia (NBRM) has immediately undertaken several measures in order to increase the banking sector stability. However, there is a need for an aggregate indicator to follow the banking sector development that will give an overall image of the banking sector condition. In this paper, a simple index of financial stability of the Macedonian banking sector is constructed, that will adequately reflect the effects of the crisis in 2008-2009. The index is based on the main financial stability determinants by CAMELS, using a selection method for the most representative financial indicators. Furthermore, the index will be compared with two other similar aggregate measures of financial or banks stability in order to test its performance.
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Keywords
Financial stability, Index, Banking, Aggregate indicator.
Publication information
Volume 2, Issue 1
Year of Publication: 2014
ISSN: 1857 - 8721
Publisher: EDNOTERA
How to cite
Popovska, J. (2014). Modeling financial stability: the case of the banking sector in Macedonia. Journal of Applied Economics and Business, Vol 2, No. 1, 68-91.