In result – low net profit to banks operating

In order to determinate
the economy of Kosovo banking stability should be analyzed. The purpose of the
article is to research the corporate governance and the solvency of the banking
system in Kosovo and recognize strengths, weaknesses, threats and opportunities.

Corporate governance is the way of governing like a sovereign state, setting
its own laws and policies from all the levels, it helps to increase the accountability,
as well as avoid disasters at the very beginning. While solvency is used to
highlight the importance of great corporate governance as a matter of imminent.

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The work discusses secondary
analysis towards directions in order to improve bank governance, great
corporate governance represents a positive link among income and economic
capabilities, while contradictory is evident with weak governance. Based on calculations
the banking system in Kosovo has faced with high risk of debt and quite low
level of equity amounts. For critical situations and against permanent risk commercial
banks operating in Kosovo don’t have defense mechanisms and parameters. At the
same time, banks regenerated new loans, however, the number of new loans was extremely
low, and as a result – low net profit to banks operating in Kosovo.


1. Author has not explained the overall situation and history
basis of the banking network system in Republic of Kosovo. The country has
declared its independence only in 2008, it means lack of experience and
knowledge, system has been developed from nothing, it definitely should be
taken into account. That’s why 6 out of 8 banks operating in Kosovo are international,
and local banks does not have enough influence, and the overall health of the
economy can not be analyzed. International banks are facing with variety issues
around the world and the amount of loans are not directly connected with

2. To criticize author quote is needed. Weak research has
resulted into wrong conclusions.

“not clearly why this decline is caused net profit in

The graphs author was using are demonstrating clear picture
– the country was growing year by year, and only in 2012 had a decline. Every
diagram shows how significant the decline was, however author has not searched
for a such a significant jump. The answer has been found – in 2011-2013 Kosovo
had crisis and clashes between the ethnic Serbs and Republic of Kosovo. Though
tensions between the two sides eased somewhat after the intervention of NATO’s
KFOR forces, they continued to remain high amid concern from the EU, who also
blamed Kosovo for the unilateral provocation. On 19 April 2013, an agreement
was signed in Brussels between representatives of Kosovo and Serbia.

3. “for every euro of equity in the banking sector it is
29.27 Euro debt total”                                “the income of
the banking system in Kosovo will have to go down by a factor exceeding 1.18
before interest obligations”

There is not comparison with the other countries. Using the
calculations the conclusion can be made very easily –  the country has unstable economy due to the
decline for every ratio. However, the overall situation around the world is not
seen, it can be a trend or the result of worldwide crisis, war or revolution in
the strongest countries around the world. The numbers do not show the real
picture, worldwide trend can be stronger decline.

4. Some of the graph are blurry, some tables 123 some 321,
in some cases author is analyzing 4 years, in some 5 years.