engleski

Impact of bad loans on the capital adequacy of banks in Croatia

Despite of the economic and financial crisis, which was caused by the banking crisis, the condition of banks in Croatia is very good. According to the indicators, the banking system in Croatia is among the most stable in Europe. If the indicators of stability and liquidity of the Croatian banks are very good, the question is why there are economic problems of the real sector in such system. Analysis of bank balance sheet, the quality of their assets and claims, leads to other findings that speak of the apparent stability of the financial system. The problem is that the part of the assets of Croatian banks is contaminated and refers to the bad loans. Bank stability that results from the capital adequacy ratio is statistically very good, but high capital adequacy ratio of Croatian banks actually has no real cover. The research results confirm that high capital adequacy ratio is unrealistic and that refers to inadequate valorisation of assets of the commercial banks.

capital adequacy, bank loans, financial stability

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