ECONOMIC ANALYTICS OF FINANCIAL SECTOR VULNERABILITY FROM CRISIS PERIODS

This article investigates the robustness of the global banking sector during two major economic downturns: the 2007–2009 Global Financial Crisis and the 2020–2022 COVID–19 Pandemic Crisis. Using fixed — effects panel regression models, the study analyzes the impact of capital adequacy, liquidity, and macroeconomic indicators on key performance metrics — Return on Assets, Return on Equity, and Non–Performing Loans — for a sample of major banks. Empirical analysis confirms that higher capital and liquidity ratios correlate positively with bank profitability and negatively with credit risk, underlining the stabilizing role of post-crisis regulatory reforms such as Basel III. Macroeconomic conditions — especially GDP contraction and unemployment — emerged as significant predictors of deteriorating banking performance. The analysis reveals consistent patterns across both crises, though with notable differences in the intensity and impact of key variables. While the 2007–2009 crisis caused more systemic damage due to fragile pre-crisis buffers and internal weaknesses, banks during the COVID-19 crisis displayed stronger resilience owing to improved capital positions, better liquidity management, and faster policy interventions. Despite structural differences, both crises confirmed the critical influence of macro-financial linkages in shaping banking sector outcomes. Inflation showed expected directional effects but was generally not statistically significant. The findings emphasize the need for dynamic risk — monitoring frameworks, forward-looking regulation, and early warning systems that integrate both institutional indicators and macroeconomic signals. As financial systems face evolving global shocks, such tools will be essential in mitigating risk transmission and preserving banking stability.