Gentjan Çera, Edmond Çera & Edlira Dashi

Abstract Capital adequacy is one of the main indicators of the banking system health and provides insight on the risk levels the banks face in their daily market operations. Therefore, it is important to study the capital adequacy ratio for the banks operating in the Albanian market and forecast this indicator for the short run. To this end, this paper uses the ARIMA modelling approach as a prognosis for this indicator. Evidence shows that this ratio will continue to modestly growth, and if the economic indicators will continue to be stable, then we expect this ratio to reach 6.225% above the minimum acceptable value.
Key words capital adequacy, banking sector, ARIMA
JEL classification G21