KALTERINA ABAZI JUSUFI
Authors country of origin: North Macedonia
Institutional affiliation: Accounting and Finance Department, Economic Faculty, “St. Cyril and Methodius” University, Skopje.
Banks are the most important participants in the financial system, but also the most significant and largest financial institutions around the world, measured through their share in the total financial sector assets. Banks play a significant role in economic growth, namely by diversifying the risk to their activity. Interest rate risk is one of the most important financial risks each bank which the banks face. Each risk is in itself a direct or indirect negative impact on the profit, activity, or realization of the ultimate goal of the banks. The risk of a change in interest rates in the portfolios of banking activities is a risk of loss arising from unfavorable changes in interest rates, as seen by the bank.
The research in this paper concentrates on several directions with a common goal – the role and the need for bank profitability in today’s conditions. The main research question is if in the research is a significant link between non-performing loans and bank profitability?
Based on these goals, the research pays special attention to the importance of the asset management companies, from which we determine the determinants of the profitability of the banking system and we analyzed them from 1998 to 2016. For this purpose, we used Ordinary Least Square the method with the determination of the determinants, where it is noted that the non-performing loans showed a negative correlation with the level of profitability in the Republic of North Macedonia and are statistically significant.
It is recommended that regulators draw up regulations and monitoring tools that will cause early warning signals about possible failures of the bank due to the accumulation of nonperforming loans.
Keywords: Bank, Regulation, Profitability of banks, ROA, Economic.
Volume 1.No.1(2018): April
ISSN 2661-2666 (Online) International Scientific Journal Monte (ISJM)
ISSN 2661-264X (Print)
DOI : 10.33807/monte.1.201904238
DOI URL: https://doi.org/10.33807/monte.1.201904238
Full Text: PDF
This is an open-access article under the CC BY-NC-ND license (creativecommons.org/licenses/by-nc-nd/4.0/)