Comparative analysis of the banking sector stability in the Western Balkan countries

Abstract

The banking sector is an important segment of the financial system, regardless of whether it is a bank-based or market-based system. In Western Balkan countries, preserving the banking sector's stability remains a particularly important condition for achieving financial stability, considering the dominant role of the banking sector in the financial system. The absence of stability in the banking sector can negatively affect not only the stability of the financial sector, but also the economic system as a whole. Additionally, ensuring the stability of the banking sector in the Western Balkan economies is of particular importance due to the fact that the banking sector is a key source of financing economic activities in these economies. Accordingly, the aim of the research is to identify the level of stability of the banking sector in the Western Balkan countries. The research results suggest that the banking sectors of the observed countries report satisfactory and relatively uniform levels of financial stability.