Socio-economic approach toward financial stability of Georgia?s banking system (ABSTRACT)

Irina Vashakmadze

Financial stability of commercial banks within Georgia’s banking system cannot be deemed as satisfactory due to the following reasons: a significant number of banks face a liquidity problem, namely, budget crisis and large scale of shade economy served to restrict the degree of money flow circulation.

Distrust towards banking institutes is still observed among the population. Hence, people prefer to keep their own savings in foreign currency with themselves. Commercial banks’ range of service is much limited and in most cases, service level is unsatisfactory. Most banks have no precise and definite strategy while their business is not designed for a long-term prospect.
To achieve financial stability of banking system in Georgia, it is essential to take the following measures: strengthening of capital adequacy, increase of assets quality and introduction of modern liquidity principles in deposits insurance management as well as new forms and methods of banking operations and state regulation of deposit secrecy protection.