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Macedonian Financial System Sees Moderate Growth in 2002

Skopje, Republic of Macedonia - The financial system in the Former Yugoslav Republic of Macedonia (FYR Macedonia) has experienced moderate growth in 2002, according to data released by the Ministry of Finance and the National Bank of the Republic of Macedonia.

Total Assets

Total assets of the financial system increased by 10.4% in 2002, reaching a total of 106 billion Macedonian denars (MKD), equivalent to approximately $1.7 billion USD. The growth was driven primarily by the banking sector, which accounted for 87.9% of the total assets.

Banking Sector

  • The largest three banks in Macedonia continued to dominate the market, holding 64% of the total banking assets.
  • The private banking sector also experienced significant growth, with its share increasing from 42.5% in 2001 to 47.5% in 2002.

Other Financial Institutions

  • Savings houses and insurance companies also showed moderate growth, with their combined assets reaching MKD 12.6 billion (approximately $204 million USD) by the end of 2002.

Concentration

In terms of concentration, the banking system remained dominated by a few large banks, with the largest three holding 64% of the total banking assets. This is slightly higher than in previous years, but still lower than in some other Central and Eastern European countries.

Comparison with Other Countries

FYR Macedonia’s banking system is smaller compared to some other Central and Eastern European countries. For example:

  • The Czech Republic has a much larger banking system, with total assets exceeding 110% of GDP.
  • Poland and Slovenia also have significantly larger financial systems than FYR Macedonia.

However, the country’s banking system is more concentrated than in many other countries, with the largest three banks holding a larger share of the market. This concentration may pose risks to the stability of the financial system, but it has also allowed for greater efficiency and competition in the sector.

Conclusion

Overall, the growth in FYR Macedonia’s financial system in 2002 was moderate, driven primarily by the banking sector. While there are challenges facing the sector, including concentration and increased competition from foreign banks, the country’s financial system remains an important driver of economic growth.

Sources:

  • Ministry of Finance
  • National Bank of the Republic of Macedonia
  • Fund staff calculations

Note: 1/ Concentration in banking system is measured by the share of assets held by the largest three banks.