Experts of the Bank of Albania have prepared a scientific paper that presents a new approach to how to measure prudent behavior of banks.
Unlike the traditional indicator group, this new analysis method includes a wide array of information covering various aspects related to prudent behavior of banks, rather than focusing on only one aspect, eg. reserves for loan losses or provisions for provisions.
This new index, cited by the expert paper of banking experts, qualitatively fulfills the risk analysis, providing timely reading of market perceptions, regarding the degree of prudent behavior of banks.
Based on the results of this analysis, it was noticed that most banks were more cautious after the global financial crisis, especially during the Greek debt crisis.
Similarly, we have found a relatively considerable correlation between prudential behavior of banks and bank stability, reads in this paper.
In order to increase and improve the “behavior” of banks, the Bank of Albania periodically conducts surveys on consumer sensitivity and perception of banking services and behaviors, but also among banking groups themselves, as efficient methods that serve to improve standards in this sector.
News Source: ATA