Criteria for Determining the Financial Stability of Commercial Banks and Ways to Increase Them

Abstract

This article explores the methodologies used to assess the financial stability of commercial banks. Financial stability is a critical aspect of the banking sector, ensuring the resilience of banks to withstand adverse shocks and maintain their functions within the financial system. The assessment of financial stability involves a multidimensional analysis, considering factors such as asset quality, capital adequacy, liquidity management, risk management practices, and macroeconomic conditions. Various quantitative and qualitative methods, including financial ratios, stress testing, and regulatory compliance assessments, are employed to evaluate banks' stability. The study also examines the implications of regulatory frameworks, such as Basel III, in enhancing the stability and soundness of the banking sector. By elucidating the key measures and indicators of financial stability, this article contributes to the scholarly understanding of banking stability and risk management practices.