Impact of the Russian-Ukrainian armed conflict on the financial performance of Armenia’s banking sector
-
DOIhttp://dx.doi.org/10.21511/bbs.20(1).2025.27
-
Article InfoVolume 20 2025, Issue #1, pp. 334-345
- 132 Views
-
14 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The importance of this study is underscored by the increasing significance of economic resilience in the face of global instability. The Russian-Ukrainian armed conflict, initiated by Russia in 2022, has caused profound shifts in the geopolitical and economic environment, affecting capital flows, foreign exchange transactions, and the credit and financial policies of countries in the region. For the Republic of Armenia, whose economy is closely tied to external markets, such events present both substantial challenges and opportunities for adaptation and transformation within the banking sector. The objective of this article is to analyze the dynamics of financial results of commercial banks in Armenia and assess the impact of the Russian-Ukrainian armed conflict on the functioning of the banking system. By analyzing financial data from five leading banks from 2020 to 2023, the study evaluates key indicators such as total assets, net profit, capital, and loan portfolios. The findings indicate significant growth in financial indicators, particularly in 2022 and 2023, driven by increased remittances, migration, and tourism flows from Russia and Ukraine. The results suggest that, despite the challenges posed by the conflict, the Armenian banking sector demonstrated resilience and capitalized on external economic shifts. This study concludes that geopolitical crises can create opportunities for the financial sector when managed effectively. Further research is needed to explore the long-term effects of the conflict on Armenia’s broader economy and the adaptation of banking policies to future geopolitical challenges.
Acknowledgment
Contributions of people who add to the success of this research are hereby recognized. Thanks for your contributions.
- Keywords
-
JEL Classification (Paper profile tab)E44, F52, G21, J61
-
References28
-
Tables5
-
Figures5
-
- Figure 1. Concentration of total assets of 5 leading commercial banks of the Republic of Armenia in 2023 (%)
- Figure 2. Dynamics of net profit of 5 leading commercial banks of the Republic of Armenia in 2020–2023 (AMD bln)
- Figure 3. Total capital ratio of 5 leading commercial banks of the Republic of Armenia in 2023 (%)
- Figure 4. Dynamics of the loan portfolio of 5 leading commercial banks of the Republic of Armenia in 2020–2023 (AMD bln)
- Figure 5. Specific weight of the credit portfolio of 5 leading commercial banks of the Republic of Armenia in 2023 (%)
-
- Table 1. Total assets of 5 leading commercial banks of the Republic of Armenia in 2020–2023 (AMD mln)
- Table 2. Net profit of 5 leading commercial banks of the Republic of Armenia in 2020–2023 (AMD mln)
- Table 3. Total capital of 5 leading commercial banks of the Republic of Armenia in 2020–2023 (AMD mln)
- Table 4. Comparison of the net profit/average equity ratio (ROAE) of 5 leading commercial banks of the Republic of Armenia for 2020–2023 (%)
- Table 5. Dynamics of the loan portfolio of 5 leading commercial banks of the Republic of Armenia in 2020–2023 (AMD mln)
-
- Adrian, T., Natalucci, F., & Qureshi, M. (2023). Macro-Financial Stability in the COVID-19 Crisis: Some Reflections, Annual Review of Financial Economics, 15, 29-54.
- Al-Habashneh, A. K., Khatatbeh, I. N., & Alzubi, K. M. (2023). The impact of income diversification on the stability of listed Jordanian commercial banks during the COVID-19 pandemic, Banks and Bank Systems, 18(3), 35-48.
- Amene, T. B., & Alemu, G. A. (2019). Determinants of financial performance in private banks: A case in Ethiopia. African Journal of Business Management, 13(9), 291-308.
- Bolivar, F., Duran, M. A., & Lozano-Vivas, A. (2024). Business model contributions to bank profit performance: a machine learning approach. Research in International Business and Finance, 64, 101870.
- Brzoza-Brzezina, M., Kolasa, M., & Makarski. K. (2021). Monetary Policy and COVID-19 (IMF Working Paper No. 2021/274).
- Chaoqun, H., Shen, W., Huizhen, J., & Wei, L. (2024). Evaluating the impact of uncertainty and risk on the operational efficiency of credit business of commercial banks in China based on dynamic network DEA and Malmquist Index Model. Heliyon, 10(1), e22850.
- Deloitte Insights. (2024). 2024 banking and capital markets outlook.
- Fares, O., Batt, I., & Lee, S. H. M. (2022). Utilization of artificial intelligence in the banking sector: a systematic literature review. Journal of Financial Services Marketing, 28, 835-852.
- Grant Thornton Armenia. (2023). Banking sector analysis.
- Hakobyan, A., Tshughuryan, A., & Martirosyan, G. (2023). The integrated reporting philosophy in business strategy. WISDOM, 25(1), 169-176.
- Karim, R., Hasan, M., Waaje, A., Yesmin, S. H., & Roshid, M. (2023). Financial Performance of Bangladeshi Listed Commercial Banks: A Generation-based Analysis. Finance & Banking Studies, 12(4), 46-56.
- Korzeb, Z., Niedziółka, P., & Zegadło, M. (2022). Assessment of the Impact of Commercial Banks’ Operating Activities on the Natural Environment by Use of Cluster Analysis. Risks, 10(6), 119.
- Lepetit, L., Nys, E., Rous, P., & Tarazi, A. (2008). Bank income structure and risk: An empirical analysis of European banks. Journal of Banking & Finance, 32(8), 1452-1467.
- Lev, B., & Thiagarajan, R. (1993). Fundamental information analysis. Journal of Accounting Research, 31(2), 190-215.
- Lv Qin, Wang, Y., Zhang, D., Yang, M., & Zheng, Y. (2020). Performance Evaluation of Commercial Banks Based on Factor Analysis. E3S Web of Conferences, 214, 02017.
- Margaryan, Z. (2023). Approaches to evaluation of financial results of RA commercial banks. Economics, Finance and Accounting, SI-1, 145-153.
- Menicucci, E., & Paolucci, G. (2016). The determinants of bank profitability: empirical evidence from European banking sector. Journal of Financial Reporting and Accounting, 14(1), 86-115.
- Mohanram, P., Saiy, S., & Vyas, D. (2018). Fundamental analysis of banks: the use of financial statement information to screen winners from losers. Review of Accounting Studies, 23, 200-233.
- Moussu, C., & Petit-Romec, A. (2013). ROE in banks: myth and reality (Working Paper). ESCP Europe.
- Noor, E. H., & Al-Dulaimi, H. D. D. (2022). Evaluating the Financial Performance of Commercial Banks in Iraq under the Corona Pandemic using the CAMELS Criterion, AgBioForum, 24(2), 31-38.
- Pinto, P., Hawaldar, I. T., Rahman, H., Mathukutti, R., & Sarea, A. (2017). An Evaluation of Financial Performance of Commercial Banks. International Journal of Applied Business and Economic Research, 15(22), 605-618.
- Raci, F., Ahmeti, S., Ismajli, H., & Aliu, M. (2021). Financial Performance Evaluation of the Commercial Banks in Kosovo. Academy of Accounting and Financial Studies Journal, 25(1), 1-8.
- Riani, R., & Ikhwan, I. (2022). The impact of Covid-19 on the banking industry efficiency: Comparison between Indonesia and Malaysian banks. Asian Journal of Islamic Management (AJIM), 4(1), 43-58.
- Rumels. (2023). Financial analysis of Armenian banking sector – 2023.
- Sang, N. M. (2022). Impact of the COVID-19 Pandemic on Bank Efficiency in Vietnam, Banks and Bank Systems, 17(1), 13-23.
- Srinivasan, P., & Britto, J. (2017). Analysis of Financial Performance of Selected Commercial Banks in India. Theoretical Economics Letters, 7(7), 2134-2151.
- Staikouras, C., & Wood, G. (2004). The determinants of European bank profitability. International Business & Economics Research Journal, 3(6), 57-68.
- Wahlen, J., & Wieland, M. (2011). Can financial statement analysis beat consensus analysts’ recommendations? Review of Accounting Studies, 16, 89-115.