The purpose of this paper is to explore the influence of bankspecific and macroeconomic determinants of all non-performing loans (NPLs) to enterprises and households in the Republic of Macedonia. The analysis is performed for the whole banking sector for the period 2003Q4 to 2014Q4, by applying the Autoregressive Distributed Lag Modelling Approach (ARDL), the co-integration model implementing quarterly time series. The results of the research indicate that the profitability of banks, the growth of loans to enterprises and to households respectively, as well as the growth of GDP, all have a negative impact, while banks' solvency and unemployment have a positive impact on the rise of non-performing loans in both models. In addition, regarding enterprises, we found that the exchange rate has a positive and statistically significant impact on the level of NPLs, while inflation has a negative and statistically significant impact on the increase in non-performing loans to households. The main contribution of this paper is that the results obtained by econometric analysis may be used for forecasting non-performing loans several years in the future, as well as for stress-testing both the entire banking system and the individual banks operating in the Republic of Macedonia.
The subject of this paper is to measure the efficiency of the Macedonian banking sector by applying two approaches: firstly, comparative analysis on the efficiency indicators of the banking sector in the Republic of Macedonia and the countries of Central and Southeastern Europe (CSEE) and secondly, Data Envelopment Analysis (DEA). The aim is to provide directions and guidelines for further strengthening of the Macedonian banking sector. According to the comparative analysis of the efficiency indicators (net interest margin and operating costs) of the Macedonian banking sector and the countries of CSEE, the countries whose banking sector shows lower operating costs are characterized with a higher level of financial deepening and greater degree of financial intermediation. The high interest margins direct towards unsuitable allocation of financial resources and insufficient competitiveness in the domestic banking sector. When applying the DEA approach, it can be stated that the group of large banks marks the highest efficiency within the Macedonian banking sector. The high concentration degree of banking activities within the group of large banks with a leading role in determining the interest rates, results in a rigid interest policy of the banks. In the direction of strengthening the efficiency of the Macedonian banking sector as a whole, the obtained results show that it is necessary for the banks to be further consolidated so as to utilize the advantages of the economies of scale, increase competitiveness, offer a diversified structure of products, invest in new contemporary software solutions that will 318 E.Naumovska, V.Cvetkoska / Efficiency of the Macedonian Banking Sector allow reinforcement of their employees' productivity and long-term reduction of the operating costs, as well.
The subject of this paper is the foreign direct investment (FDI) inflow in Macedonia and its impact upon the economic growth and development of the country. Its basic purpose is to analyse the interconnection of FDI with a number of economic, political and institutional variables in Macedonia. We decided to apply Vector Error Correction Model (VECM) on FDI impact upon the Macedonian economy. The FDI indicator is calculated as a function of certain fundamental economic variables (GDP growth rate, labor productivity rate, openness to trade, current account balance) as well as of Worldwide Governance Indicators (control of corruption, government effectiveness, political stability, regulatory quality and rule of law). Results obtained by the econometric model should provide relevant conclusions on the impact of the up-to-date FDI inflow upon the growth and development of the Macedonian economy.
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