Financial Stability of the Banking Sector in European Countries: A Comparative Analysis

Abstract

The outburst of the financial crisis in 2008 raised a number of questions about financial stability and banking development, given that the crisis originated in advanced economies, where the financial sector had grown both very large and very complex. This study presents the results of research into ways of ensuring financial stability in the banking sectors in European and EU associated countries. The empirical analysis for EU member and associate countries is carried out for the period 2004-2014 and shows that significant heterogeneity in the member states’ descriptions of their banking sectors not only led to different levels of Z-score, but also to principally different factors influencing the stability of banking activities in EU countries and countries associated with the EU. 

Keywords: Banking sector, Financial stability, EU Integration.  

JEL: F15, F36, G21.