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Estimation Of The "Normal" Credit Growth In The Republic Of Macedonia With Regards To The Economic Fundamentals

Author

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  • Elena Naumovska

    (Faculty of Economics – Skopje, University ss. Cyril and Methodius, Republic of Macedonia)

  • Mihail Petkovski

    (Faculty of Economics – Skopje, University ss. Cyril and Methodius, Republic of Macedonia)

  • Iskra Stanceva - Gigov

    (The Institute of Economics – Skopje, University ss. Cyril and Methodius, Republic of Macedonia)

Abstract

The subject of this paper is the credit growth in the Republic of Macedonia and the way in which it contributesto the financial development process. Two types of approach are used in the paper in order to estimate credit growth in the Republic of Macedonia. The first is the statistical approach, based on deviations of the Credit/GDP ratio series in their long-term trend. The second is the econometric approach based on using an error correction model in order to explain the level of credit growth as a function of economic fundamentals. The basic purpose of this paper is to explore the two-way relationship between the sustainability of credit growth and key developments in macroeconomic and financial fundamentals. According to the obtained results the paper provides suggestions for maintaining sustainability of the credit growth in the Republic of Macedonia which would result with a positive impact on the financial sector development. Our findings show that the Macedonian banking sector has not experienced credit booms, even though a rapid credit growth and a deviation of the Credit / GDP indicator

Suggested Citation

  • Elena Naumovska & Mihail Petkovski & Iskra Stanceva - Gigov, 2015. "Estimation Of The "Normal" Credit Growth In The Republic Of Macedonia With Regards To The Economic Fundamentals," Journal Articles, Center For Economic Analyses, pages 47-56, June.
    • Handle: RePEc:cmk:journl:y:2015:p:47-56
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    credit activity; financial stability; market capitalization; credit growth; credit booms; non-performing-loans; source of financingflow of funds account; crisis.;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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