The determinants of bank stability: Evidence from selected Balkan countries and Turkey
The phenomenon of financial stability has gained importance as monetary and fiscal policies aiming at price stability in the global crises are not sufficient to prevent financial crises. After 2007 global crisis, the importance of bank stability better understood. This paper investigates the determinant of bank stability in selected Balkan countries and Turkey. For this aim, we used to Z-score and NPL as dependent variables. We used bank performance, financial structure and macro variables as independent variables. According to ANOVA test and regression analysis, the strongest correlation between non-performing loans as the dependent variable of the Western and some EU Member countries (Bosnia and Herzegovina, Serbia, Croatia, Slovenia, Montenegro, Macedonia) and Turkey was achieved with the following independent variables: the total non-interest income to total income and foreign bank assets to total bank assets. Observed on the other hand, the weakest link between NPLs as a dependent variable was achieved with the following independent variables: the gross domestic product, the net interest margin ratio, Lerner index and the cost to income. Another dependent variable, i.e., Z-score was recorded the strongest correlation with the following independent variables in the model: the gross domestic product, the Lerner index, the net interest margin and the cost to income. The weakest link was achieved with the following independent variables: the total non-interest income to total income and the foreign bank assets to total assets.