CREDIT RISK AND STABILITY OF THE FINANCIAL SYSTEM IN KOSOVO

Abstract

In this paper are discussed two important topics: Credit risk and the Stability of the financial system in Kosovo. Banks have a unique role in the financial system and the banking system performance has a huge impact on the financial system and country's economy. Therefore, the above- mentioned entities in the paper are examined more in terms of banks and banking business. The paper consists of several chapters. What is the risk, what are the mechanisms and risk management techniques, could we foresee the future, how safe is the future and similar issues are elaborated in the first chapter. In the second chapter we have described and elaborated credit risk, which increasingly takes place in business with a focus on banking business. Chapter three elaborates information and data on the stability of the financial system in Kosovo, also based on the banking system, which due to its size and function that distinguishes from other financial institutions, bears the brunt of the stability of the financial system in Kosovo. Insurance companies and pension funds have been roughly described. All quantitative data for the financial system in Kosovo are taken from "Financial Stability Report" (RSF), published by the Central Bank of Kosovo. In Kosovo, as in many other countries banks are regulated and examined institutions in the financial system. I will work to demonstrate the role of the Central Bank in the quiet operation and stability of the financial system. The third chapter will explain the methodology used in the treatment of this problem. And the last chapter consists of conclusions and recommendations.