THE ASPECTS OF FINANCIAL SUSTAINABILITY IN THE CONTEXT OF LATVIAN BANKS

The research focuses on the analyses of bank sustainability that encompasses internal and external factors essential for effective management of financial and other resources. Competitiveness as part of sustainability cornerstone is also examined in this paper in the context of specificities of Latvian banks. The aim of the research is to describe main aspects that relate to banking sustainability in the context of the Latvian banking sector which is characterized by considerable market participant density and variability of business models, thus making competitiveness a significant contributing factor. The analysis presented in the paper employs both qualitative and quantitative methods. The qualitative part focuses on the content analysis that was carried out by means of a literature review, market analysis and examination of relevant documentation (i.e. banking prudential regulation), but quantitative part focuses on the analysis of the statistical data and respective calculations. Various aspects that relate to sustainability of banks are shown through selected factors, which are deemed to be significant in the context of Latvian banks. The research outlines the main aspects that describe bank sustainability in the tailored view of Latvian banks. One of the main innovations of this paper is the analyses of dual business models that comprise the Latvian banking sector - one emphasizing servicing local, the other - foreign customers. The second business model is currently in flux, transforming into different composition due to extensive regulatory interventions and measures to prevent money laundering and terrorism financing and to enhance the effectiveness of internal control systems. These changes are anticipated to only strengthen the importance of competitiveness as one of the cornerstones for sustainability in Latvian banking sector given the density of market participants, their market shares and client bases. Main aspects that relate to sustainability of a bank are recognized from extensive information analyses, but competitiveness needs to be analysed as an additional aspect in the context of Latvian banking sector. The overview of available information allows concluding that sustainability can be also analysed using frameworks different from the widely employed green resource allocation method.