The Role and Financial Performance of Banks in the Western Balkans
The Role and Financial Performance of Banks in the Western Balkans

Summary/Abstract: The bank's performance is its ability to generate sustainable profitability. Although banking institutions have become increasingly complex, the key factors in their performance remain earnings, risk-taking efficiency and financial leverage. The countries of the Western Balkans have some common features: the history of socioeconomic development, the transformations that have taken place, the reforms undertaken, liberalization, restructuring and the path to development. Their financial sector is primarily bank-based, so the soundness of the banking sector is significantly important for the stability and progress of their economies in the long term. Using a qualitative and quantitative analysis, the main objective of this paper is to generate and explain the main features about the role and financial performance of banks in the Western Balkans. The research methodology is based in explaining through a descriptive and graphical analysis, the particularities of the main banking systems in Albania, Bosnia and Herzegovina, North Macedonia and Serbia, presenting the four main performance measurement indicators: return on assets (ROA), return on equity (ROE), cost-to-income ratio and net interest margin. Analyzing the data for the period 2000- 2019, it was assessed that the region is quite consistent in terms of the performance of the banking sector, the latter being almost equally dynamic for all four countries. The regional economic environment does not favor the stability of the financial system, but prevents the increase of the efficiency and productivity of the banking sector.

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