INSTITUCIONĀLĀS VIDES ATTĪSTĪBA UN BANKU STABILITĀTE LATVIJĀ

Institutional environment and its quality are significant for the soundness of banks. In this context, it is of high importance to detect correctly those spheres of institutional environment, which are the most important for the soundness of banks and require improvements in each concrete case. During the analysis, the authors of the paper pay attention exactly to the development of institutional environment of bank sector and topical risks for the soundness of banks in Latvia. The authors study changes of the institutional environment of bank sector in Latvia, as well as find the linkage between institutions introduced in to the Latvian bank sector during the time analysed and the soundness of banks. As a result of the analysis, the authors offer periodization of the development of institutional environment of bank sector taking into account significant events for development of institutional environment and soundness of banks. The authors also demonstrate the linkage between the elements of institutional environment that are potentially significant for the soundness of banks and soundness of banks. Novelty of the research appears in the authors’ approach to evaluate the soundness of banks in Latvia in context of quality of institutional environment, as well as internationally comparable data of Global Competitiveness Report. These allow detecting the most significant elements of institutional environment for the soundness of banks in Latvia.