Navigating the storm: assessing the impact of COVID-19 and digitization on banking performance in Western Balkan countries

Abstract

Purpose: The purpose of the study is to assess the impact of both external factors, such as the COVID-19 pandemic, and internal factors, such as digital transformation, on the productivity and sustainability of banks in the Western Balkans.
Methodology: Among the methods used were the analytical method, the statistical method, the functional method, the deduction method, the synthesis method, and the comparison method.
Findings: For a comprehensive assessment of the financial performance of the banking system in six countries in the Western Balkans, three key variables were used – return on assets, return on equity, and non-performing loans. To emphasize the impact of the COVID-19 pandemic on the results of the banking system, the indicator of the number of registered cases of COVID-19 was used. To emphasize the impact of digitization, indicators such as the number of automated teller machines (ATMs) and point of sale (POS) terminals were included and accounts in the electronic banking system.
Originality: The study analysed the combined impact of digitization and the crisis caused by the COVID-19 virus on the performance of the banking system in the Western Balkans using three regression models.

Keywords: digital sustainability, financial productivity, electronic banking services, economic impact, regression models