Deteriorating cost efficiency in a bank signals the risk of failure

Anca Podpiera, Jiří Podpiera

The banking sector is a dominant component of the financial system in the Czech Republic. The stability of the banking system is of key importance as regards the financial stability of the economy as a whole. Any turbulence in the banking system can, moreover, generate a need for additional fiscal expenses in this area. For these reasons it is important to analyse banking sector developments in more detail and to attempt to enhance the early warning system toolkit – bank ratings, in order to prevent bank failures more effectively.

Issued: June 2006

Download: Thematic article in the Financial Stability Report 2005 (pdf, 56 kB)