Performance Analysis of the Northern and Southern Banking Sectors on Cyprus Island Under the Covid-19 Era

Veclal Gündüz ()
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Veclal Gündüz: Bahçeşehir Cyprus University

A chapter in New Dynamics in Banking and Finance, 2022, pp 101-119 from Springer

Abstract: Abstract The coronavirus pandemic still continues and has had negative impacts on all sectors of the world. Besides their aim to protect people’s health and reduce the spread of the virus, governments have been taking measures to keep financial stability and avoid bankruptcies and unemployment. The aim of this study is to investigate the performance of the banking sectors of Northern and Southern Cyprus during the period of the pandemic. They are examined and compared through the CAMEL analysis based on capital adequacy, asset quality, management, earnings (profitability) and liquidity ratios, which were calculated quarterly for the period 2016–2020. It is found that the effects of the pandemic on banks differed for the two regions, depending on governmental measures and the roles of banks. The Northern banks generated more profits due to the postponements of credits; meanwhile, Southern banks’ interest income was recorded higher compared to their interest expenses. The asset quality of Southern banks weakened because of the high level of non-performing loans (NPLs) recorded after the 2013 crisis. But they are more liquid than those of the Northern banks with the help of European Union (EU) funds. This study gives a set of recommendations on how to improve the financial performance of banks.

Keywords: Covid-19; CAMEL; Northern Cyprus banking; Southern Cyprus banking (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-93725-6_6

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DOI: 10.1007/978-3-030-93725-6_6

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