ESTIMATION OF THE "NORMAL" CREDIT GROWTH IN THE REPUBLIC OF MACEDONIA WITH REGARDS TO THE ECONOMIC FUNDAMENTALS

Elena Naumovska (), Mihail Petkovski () and Iskra Stanceva - Gigov ()
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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

Journal Articles, 2015, 47-56

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

Keywords: credit activity; financial stability; market capitalization; credit growth; credit booms; non-performing-loans; source of financingflow of funds account; crisis. (search for similar items in EconPapers)
JEL-codes: E51 G21 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:cmk:journl:y:2015:p:47-56

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