The Commercial Banks’ Credit Risk Efficiency: Empirical Evidence from Kosovo

Journal of Eastern European and Central Asian Research (JEECAR), 8(2), 240 - 254. https://doi.org/10.15549/jeecar.v8i2.635

15 Pages Posted: 30 Jun 2021

See all articles by Arbana Sahiti

Arbana Sahiti

University of Prishtina - Faculty of Economics

Arben Sahiti

University of Kadri Zeka, Faculty of Economics

Date Written: June 14, 2021

Abstract

Commercial banks' credit risk management is a function that focuses on events that may affect the achievement of objectives. Improper management will result in negative consequences or results. Therefore, banks usually pay more attention to events with a higher probability and impact of a direct loss of revenue and capital than events that may result in positive effects. This research adopts secondary data and seeks to analyze credit risk management of commercial banks in Kosovo through a developed DEA (Data Envelopment Analysis) model. The study covers seven commercial banks in Kosovo for the period 2008-2016 and uses Tobit regression to determine credit risk efficiency. The estimation results show a statistically significant positive relationship between bank efficiency, capital adequacy, and loans. Moreover, the study found that banks' efficiency factors, including profitability, deposits, costs, banks size, GDP growth, and inflation, are not statistically significant.

Keywords: risk management, creditor, commercial banks, capital, bank efficiency

JEL Classification: G2, G21

Suggested Citation

Sahiti, Arbana and Sahiti, Arben, The Commercial Banks’ Credit Risk Efficiency: Empirical Evidence from Kosovo (June 14, 2021). Journal of Eastern European and Central Asian Research (JEECAR), 8(2), 240 - 254. https://doi.org/10.15549/jeecar.v8i2.635, Available at SSRN: https://ssrn.com/abstract=3870511

Arbana Sahiti

University of Prishtina - Faculty of Economics ( email )

Str Agim Ramadani, pa numer
Prishtina, Kosova, 10000
Kosovo

Arben Sahiti (Contact Author)

University of Kadri Zeka, Faculty of Economics ( email )

Gjilan
Kosovo

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