Moldovan banking efficiency

Abstract

Banking activity as a whole is the link between depositors and borrowers, aiming the provision of key services to facilitate consumption and promote economic growth. Thus, banking regulation and risk oversight are vital aspects of the efficient and sustainable functioning of the economy. Providing bank loans to the real economy and facilitating capital market activity represent the key for developing a sustainable economy and an internationally competitive banking system. Deriving from the key role the bank credit has for the functioning of the real economy, is imperative to analyze how ongoing structural changes in banks have affected their ability to fulfill the core function in intermediating loans. The banking sector as a whole in the medium severity scenario shows a strong resilience, all banks registering sufficient own funds rate. However, credit risk continues to pose the most significant threat to the stability of the banking sector, highlighting the importance of maintaining sufficient capital rate to absorb estimated losses even in the most pessimistic scenarios. Banking performance aims first of all to determine the bank's soundness, its degree of exposure to various risk categories and then its level of efficiency. JEL: G20, G21.