The effect of the COVID19 pandemic on the financial stability of the banking industry: the case of Eurasian Economic Union countries

G. Utarova, Alimshan Faizulayev

2023

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DOI 10.52821/2789-4401-2023-2-153-164
Data confidence 70 medium
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Abstract

The purpose of research is to identify the influence of bank-specific and macroeconomic variables on banking sector stability in the case of Eurasian Economic Union countries. For this purpose, it uses KASE and World Bank Database. The data was received from 10 commercial banks of the Eurasian Economic Union countries (Russia, Belarus, Kazakhstan, Kyrgyzstan, Azerbaijan, and Armenia) that cover the period 20162021. Methodology is the panel corrected standard error model (PCSE) to observe the relation of dependent and independent variables. Altman Z-score is used as an indicator of financial stability. Return of assets (ROA) is an indicator of company profitability. The originality / value of the research is a comparison of the factors that influence the stability and profitability of the banking industry in Eurasian Economic Union countries. The estimation findings of the research indicate that bank-specific and macroeconomic strongly impact the financial stability in the banking sector. For example, asset quality and corruption control are significantly and negatively related with banks' stability. On the other hand, return on assets (ROA), bank size, political stability, and time dummy effect on the stability of the banking system are positive and statistically significant.