ORCID
Gerti Shijaku 0000-0002-3434-0359
Keywords
Bank Stability; Prudential behaviour; LLP
Abstract
This paper investigates how bank prudential behaviour affects bank stability, focusing only in the period after the global financial crisis. For this reason, we construct a new composite proxy as a measure for bank stability condition and another one for bank prudential behaviour. Then, we make use of a sample with a set of data for 16 banks operating in the Albanian financial sector over the period 2008–2015. The main results provide strong supportive evidence that there exist a strong positive relationship in the prudential – stability nexus, which confirms that prudential behaviour is a key fundamental contributor for bank stability. We also used a quadratic term of the prudential indicator to capture a possible non-linear relationship between bank prudential behaviour and stability, but found no supportive evidence. Finally, macroeconomic conditions are also found to be crucial for bank stability. Similarly, improving operational efficiency and capital structure boost bank stability.
Acknowledgments
I would like to express my special thanks and gratitude to my supervisor Professor Franco Fiordelisi for his continued assistance, support and his very helpful comments during my research.
Recommended Citation
Shijaku, G. (2024). Bank prudential behaviour and bank stability – how far do they go. Journal of Banking and Financial Economics, 2017(8), 127-150. https://doi.org/10.7172/2353-6845.jbfe.2017.2.6
First Page
127
Last Page
150
Page Count
24
Received Date
4 May 2017
Revised Date
22 August 2017
Accept Date
12 September 2017
Online Available Date
22 September 2017
DOI
10.7172/2353-6845.jbfe.2017.2.6
JEL Code
C26; E32; E43; G21; H63; L51
Publisher
University of Warsaw