THE RESILIENCE OF CENTRAL AND EASTERN EUROPEAN BANKING SYSTEMS DURING THE COVID-19 CRISIS

Dorina Clichici () and Cristina-Georgiana Zeldea ()
Additional contact information
Dorina Clichici: Senior Researcher, PhD, Institute for World Economy, Romanian Academy
Cristina-Georgiana Zeldea: Researcher, PhD Student, Institute for World Economy, Romanian Academy, Bucharest University of Economic Studies

Economy and Sociology, 2021, issue 2, 20-29

Abstract: The Covid-19 crisis has severely affected Central and Eastern European (CEE) states, causing major economic activities to be blocked during the pandemic, shrinking domestic demand and investment. The aim of the research is to analyse the impact of the pandemic event on CEE banking systems, in the light of the most relevant indicators of banking stability. Both qualitative and quantitative research methods were used to achieve the goal. The results of the analysis revealed that the pandemic crisis did not affect the quality of banking assets in the CEE, the rate of non-performing loans remained at a fairly low level in the most of the states. At the same time, due to major reforms that followed the international financial crisis of 2008, banks have a sufficiently high level of capitalization and a reasonable level of indebtedness, reflecting a high resilience to shock of CEE banking systems. However, extremely low level of interest rates in the pandemic have determined a deterioration in asset performance in most banking systems in the CEE. Moreover, the outlook regarding the CEE banking systems remains quite uncertain. Considering the large-scale measures to reschedule credit rates, through moratoriums on bank loans, but also the financial support schemes initiated by central banks and governments, the CEE region is facing high risk costs, which manifest mainly through the migration over time of credit risk exposure. In this context, non-performing loan ratios are expected to increase in the near future. Moreover, the widespread shift to lower interest rates will exert pressure on lending margins.

Keywords: Covid-19 crisis; CEE banking systems; return on assets; return on bank capital; bank capitalization; leverage ratio (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://economy-sociology.ince.md/index.php/Econom ... y/article/view/75/74 (application/pdf)
https://economy-sociology.ince.md/index.php/Econom ... y/article/view/75/94 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aat:journl:y:2021:i:2:p:20-29

DOI: 10.36004/nier.es.2021.2-02

Access Statistics for this article

Economy and Sociology is currently edited by Olga Gagauz

More articles in Economy and Sociology from The Journal Economy and Sociology Contact information at EDIRC.
Bibliographic data for series maintained by Iordachi Victoria ().