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The Impact Of Household Sector Risks To The Soundness Of The Romanian Banking System

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  • Nicolae Dardac
  • Iustina Boitan

Abstract

The paper focuses, primarily, on assessing if risks associated to household sector have a significant impact on Romanian banking system's soundness and stability, by establishing which household specific variables are the most important and have to be monitored. We have considered several representative prudential and performance banking system's indicators and we have performed a regression for each one, against a set of 12 explanatory variables, concerning households' balance sheet, their net earnings, the dynamics of unemployment rate, the degree of indebtedness, banking system's exposure to currency risk associated to households. Our empirical findings suggest that banking system profitability, expressed as return on equity, and liquidity indicator are the most influenced by households' financial behavior and the evolutions on the labor market.

Suggested Citation

  • Nicolae Dardac & Iustina Boitan, 2009. "The Impact Of Household Sector Risks To The Soundness Of The Romanian Banking System," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(11), pages 1-59.
    • Handle: RePEc:alu:journl:v:1:y:2009:i:11:p:59
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    References listed on IDEAS

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    More about this item

    Keywords

    banking system vulnerability; prudential indicators; households' financial position; logistic regression;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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