Banking Efficiency in Kosovo during the Global Financial Crisis

Abstract

In this research paper is analyzed the impact of banking efficiency on banking sector during of global financial crisis 2008 - 2010 with special focus Kosovo and as the main arguments for discussions are as following: overall banking efficiency in Kosovo, difference between loan and deposit rates in banking sector and difference in efficiency among banks with domestic and foreign investment. In methodology, the data collections are from financial and banking institutions in Kosovo and they are used and calculated through STATA program. The two main analyses are: DEA model (CRS and CRS model for efficiency) and regression methods (OLS method of regression and correlation matrix). The result of DEA analysis indicate that there is a constant increase of efficiency from 0.795 (CRS & VRS) in 2008 to 0.832 (CRS) and 0.913 (VRS) in 2010. The OLS method shows results as following: all variables that are involved in the research (non - performing loans -9.9, interest rate of loans -5.2 and ROA -14.7) have negative impact on banking sector. Also in T-statistics analysis argue that all variables are non-significant (T<2) to banking sector. In correlation method, the results show that the non - performing loans (-0.48) and ROA (-0.08) have a negative correlation whereas FDI (0.06) has positive correlation to banking sector.

DOI: 10.5901/ajis.2015.v4n2p367