The Role of the banking sector for sustainability of the financial system in Lithuania

Performance of banks has a substantial impact on the growth of economy; since commercial banks accumulate free funds, redistribute financial resources, issue credits to businesses and private persons that promote consumption, economic development, innovations and growth of economy. However, operations of banks are subject to control as no other sector of economy, with particular attention being placed on the supervisory system. As a number of research studies show, the economic recession was triggered by irresponsible behaviour of commercial banks in terms of lending that had led to “overheating” of the economy and resulted in, above all, a crisis of the financial system, which was followed by an economic crisis and a political crisis