Financial comparison of Western Balkan and Baltic Sea states using the CAMEL approach
Financial comparison of Western Balkan and Baltic Sea states using the CAMEL approach

Summary/Abstract: This article aims to compare the situation in the banking sectors of two regions that have much incommon due to their political and economic history: the Western Balkan states of Serbia, Croatia,and Macedonia and the Baltic Sea states of Lithuania, Estonia, and Latvia. It presents threeapproaches to defining banking stability that can be found in literature and carries out a preliminaryanalysis of the financial performance of the discussed banking sectors using the CAMELapproach. Although in 2010 the banking sectors of the Baltic Sea states were in a worse shape thanthe banking sectors of the Western Balkan states, it has been proved that the banking sectors incountries in which the process of economic transformation has been completed could recoverfrom a crisis faster than states that are still undergoing this process. Economic transformation is essentialfor the further development of the market economy and the sooner it is completed, thesooner the banking sector can develop and the easier it will be to recover from a crisis or an externalshock

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