Empirical Insights Into Portfolio Management and Bank Performance in Kosovo: A Generalized Method of Moments Examination

Abstract

The purpose of this study is to analyze certain banking factors, namely the managing of the investment portfolio in the banking business of Kosovo. The data used are time series on an annual basis for a total of the last 13 years, and these data were tested using the Generalized Method of Moments. The findings of the study on the return on assets show that investments in the production sector have a negative influence, whereas, investments in the trade sector, and investments in short-term securities have a statistically important positive influence on return on assets. With the same level of importance investment in the production sector negatively influences the return on equity, whereas investment in the trade sector and investment in short securities positively affect the return on equity. The surprising result has turned out to be in the rankings in the service sector since it has a non-significant statistical value. From the aspect of innovation and originality, during the investigation of the empirical literature, we did not notice that these independent indicators were included.