Acta Univ. Agric. Silvic. Mendelianae Brun. 2019, 67(2), 493-501 | DOI: 10.11118/actaun201967020493

Determinants of Solvency in Selected CEE Banking Sectors: Does Affiliation with the Financial Conglomerate Matter?

Pavla Klepková Vodová
Department of Finance and Accounting, School of Business Administration in Karviná, Silesian University in Opava, Univerzitní nám. 1934/3, 733 40 Karviná, Czech Republic

The aim of this paper is to describe the development of bank solvency in six selected Central and Eastern European countries (Bosnia and Herzegovina, Bulgaria, Croatia, Romania, Serbia and Slovenia) and to find out if the share of equity in total assets is influenced by the affiliation of banks with financial conglomerate or if other determinants are more important. The data cover the period from 2011 to 2017. The highest level of capital buffers hold Serbian banks, solvency of Croatian and Slovenian banks is below average. The results of the panel data regression analysis showed that the affiliation of banks with financial conglomerate does not statistically significant affect the simplified solvency ratio in these selected CEE countries. Instead, some bank-specific and macroeconomic factors matter. Especially important is the lagged value of bank solvency. Among other factors, bank profitability and liquidity, quality of its loan portfolio and size of the bank, as well as the economic cycle and price of credit and debt were significant for some countries.

Keywords: solvency, financial ratio, panel data regression analysis, commercial banks, financial conglomerates, banking sector, determinants
Grants and funding:

Publication of this paper was supported by the Czech Science Foundation (Project GAÈR 16-17796S, Affiliation with financial conglomerate as a determinant of performance and risk of banks). The support is gratefully acknowledged.

Received: January 12, 2018; Accepted: February 19, 2018; Published: April 29, 2019  Show citation

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Klepková Vodová, P. (2019). Determinants of Solvency in Selected CEE Banking Sectors: Does Affiliation with the Financial Conglomerate Matter? Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 67(2), 493-501. doi: 10.11118/actaun201967020493
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