The effects of prudential policy measures on financial stability in post-transition countries

Mario Pecaric () and Josip Viskovic
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Mario Pecaric: University of Split, Faculty of Economics, Split, Croatia, University of Rijeka, Faculty of Economics, Rijeka, Croatia
Josip Viskovic: University of Split, Faculty of Economics, Split, Croatia

Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, 2013, vol. 31, issue 1, 9-34

Abstract: The empirical research of prudential measures effectiveness is still scarce, especially for central and southeast European countries. The aim of this paper is to analyze the effects of prudential policy on financial stability of post-transition bank-oriented countries using panel data analysis approach. Using the sample of central and southeast European countries for the period 1998 – 2010, we found that these measures generally reduce the level of non-performing loans, increase the level of profitability, partially affect banking system liquidity, but do not improve credit to deposit ratio. We point out two main conclusions: (1) prudential measures positively affect banking system stability expressed through financial stability indicators; (2) prudential measures represent important instrument of a central bank orchestra.

Keywords: prudential measures; monetary controls; financial stability; bank-oriented financial systems; panel data analysis (search for similar items in EconPapers)
JEL-codes: E58 G28 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:rfe:zbefri:v:31:y:2013:i:1:p:9-34

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