Munich Personal RePEc Archive

History and development of the banking sector in Kosovo

Zogjani, Jeton and Kovaci-Uruci, Fife (2023): History and development of the banking sector in Kosovo.

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This paper aims to discuss the main challenges and difficulties that the banking system in Kosovo was faced under the former Yugoslavia and the Serbian state(s). Also, this paper includes a discussion over the process of consolidation and development of the banking sector during the post-war period in Kosovo and the process of modernization in the post-independence period. The paper is based on the main banking indicators of the banking system in Kosovo, including bank assets, loans and deposits, banking performance and profitability indicators as well as banking electronic services over the last two decades. The highest growth rates of loans and deposits in Kosovo have been during the period 2004 - 2013, where household demand for loans and deposits have been higher during this period. Then, net banking profit in Kosovo has had an average annual growth of 80 million Euros during the period 2014 - 2020 and it is considered with the highest average growth over the last two decades. Since 2000, banking profitability indicators have shown a continuous improvement and their largest average annual growth has been during the period 2015 - 2020 while non-performing loans have had an average annual decline from 8.7% in 2005 to 2.7% in 2020. Also, electronic banking services have had an enormous growth and development, and these services have enabled banking customers to use them directly and continuously throughout 7/24. In conclusion, Kosovo has had the long way from a planned economy to a market economy but it has resulted in a difficult and quite challenging transformation. Since 1999, economic growth and the banking environment in Kosovo have enabled banks to improve, increase and expand their activities.

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