Finances- Accounting RISK AND PROFITABILITY IN BANKING SECTOR OF NEW MEMBERS STATES AND CANDIDATE COUNTRIES

Abstract: With the recent accession of the new member states to the European Union, there is clearly a need for detailed analysis of their banking system risk and profitability. Rapid credit growth has been a recent feature of financial development in all countries under review and thus constitutes the main financial stability challenge. In general, monetary authorities have responded to these challenges by tightening monetary conditions and prudential standards, with concrete measures also reflecting the different monetary and exchange rate regimes in the region. Key words: risk, profitability, candidate countries, new member’s states, Over the last years, new member states (Bulgaria and Romania) and candidate countries (Croatia and Turkey) have seen strong economic growth, coupled with disinflation or low inflation. Domestic demand, fostered partly by rapid credit growth and strong capital inflows, has been the main engine of growth. In addition, given the increasing integration with the euro area and the EU, export performance has been buoyant, but outpaced by even stronger import growth