THE ESSENCE OF THE SUSTAINABILITY OF THE BANKING SECTOR AND THE FACTORS INFLUENCING IT

Abstract

In this article, the essence of the sustainability of the banking sector and the factors influencing it have been researched. The banking sector is one of the main pillars and most important components of a country's economy. According to the author, its sustainability is of vital importance for macroeconomic stability, the reliability of financial markets, and the overall investment climate. In the article, is emphasized the importance of implementing effective approaches against both internal 
and external risk factors in order to maintain the sustainability of the banking sector. In the article, both internal and external factors affecting the sustainability of the banking sector are analyzed, and the measures that banks should implement to ensure sustainability in the banking sector are also identified. It is argued that, in order to ensure sustainability in the banking sector, banks should formulate business models aligned with digitalization trends, improve governance and risk management mechanisms, strengthen capital resilience, diversify their credit portfolios, enhance customer trust, and accelerate the implementation of innovative banking products. The requirements, which are established in the current legislation in order to ensure that banks can operate reliably, are emphasized. The article also analyzes issues related to the methodology and indicators used to assess the financial stability of banks (bank capital, bank assets, bank income, liquidity, profitability, bank liabilities, bank management, etc.). Based on the fact that banks are public institutions and that banking activities have a public character, the sustainability of the banking system is also linked to the criterion of how well banks’ activities meet public needs. In conclusion, all the ideas presented and the research and analyses conducted within the article are summarized, and certain considerations are put forward.