Improving the methodology for assessing the financial stability of banks

Abstract

The financial stability of banks is a crucial factor ensuring the resilience of the overall banking system. This
study examines key indicators such as capital adequacy, credit risk, liquidity, market risk, and profitability, which enable
timely identification of potential threats to individual credit institutions. By synthesizing these metrics into a comprehensive
financial stability ratio, the study proposes a refined methodology for assessing the financial soundness of banks. Empirical
analysis using data from a specific period underpins the proposed approach. The findings contribute to the development
of more effective tools for safeguarding systemic banking stability