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
Date Written: June 14, 2021
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: Suggested Citation