Comparative Analysis of Banking System Profitability in Western Balkan Countries

  • Qazim Tmava University of Mitrovica “Isa Boletini”, Kosovo
  • Fahredin Berisha FAMA Coledge, Kosovo
  • Milaim Mehmeti University of Mitrovica “Isa Boletini”, Kosovo
Keywords: Western Balkan, banking sector, profitability, ROA, ROE


The aim of this paper is to analyze the profitability of the banking sector in the Western Balkan countries. (Note 1) This paper reviews return on assets (ROA) as an indicator of profit and return on equity (ROE) as an indicator of profitability in the banking systems of the respective countries, as well as some other macroeconomic variables that influence them. The main objective of this study is to identify the specific and macroeconomic variables of this industry, that have an impact on the profitability of commercial banks operating in the Western Balkan countries during the 2008-2015 period. Specifically, this paper addresses external indicators (gross domestic product, remittances, foreign direct investment, unemployment), and industry and bank specific indicators (assets, loans, loan-to-deposit ratio, non performing loans and interest rates) that affect the profitability of the banking system in respective countries.

Therefore, according to the data generated during the research and the literature review, the profitability of banks measured by the ROA and ROE indicators, regarding the analyzed countries, turns out to be extremely low, especially compared to EU countries where they strive.


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Indicators of bank profitability in the WBC, %, during the 2008-2015 period