Banking and Financial Sector in South-eastern Europe

Financial and banking systems play a crucial role for the reconstruction of war-worn countries, for the completion of the transition process and for the economic development. Financial systems in transitino countries had to be build from the scratch, often without any consolidated experience in Western-styly financial activities. Notwithstanding considerable efforts on the legal and institutional fronts, financial systems usually remain fragile and too thin in order to fulfill their economic functions. Financial and banking sectors are usually the weakest component of the economic setting through which domestic and external shocks could be exacerbated and became pervasive. Aim of this paper is to summaries the reform efforts and the structural evolution of financial system, particularly of the banking secto in Europea south-east countries (Albania, Bosnia H., Bulgaria, Croatia, Macedonia, Romania, Yugoslavia plus Slovenia. Reforms and economic development in this area are at a very different stage but it could be of some interest to summaries some common regional features such as development patterns in the last decade, banking reforms, size and role of financial and banking crisis. This could be done in the first part opf the paper; country specific profile could be added in a second part.

Banking and Financial Sector in South-eastern Europe

Financial and banking systems play a crucial role for the reconstruction of war-worn countries, for the completion of the transition process and for the economic development. Financial systems in transitino countries had to be build from the scratch, often without any consolidated experience in Western-styly financial activities. Notwithstanding considerable efforts on the legal and institutional fronts, financial systems usually remain fragile and too thin in order to fulfill their economic functions. Financial and banking sectors are usually the weakest component of the economic setting through which domestic and external shocks could be exacerbated and became pervasive. Aim of this paper is to summaries the reform efforts and the structural evolution of financial system, particularly of the banking secto in Europea south-east countries (Albania, Bosnia H., Bulgaria, Croatia, Macedonia, Romania, Yugoslavia plus Slovenia. Reforms and economic development in this area are at a very different stage but it could be of some interest to summaries some common regional features such as development patterns in the last decade, banking reforms, size and role of financial and banking crisis. This could be done in the first part opf the paper; country specific profile could be added in a second part

The bank-firm relationships after Basel 2: a survey on Italian firms

This paper shows the results of a survey on firms regarding the changes that are occurring in the bank-firm relationship in view of Basel II. The survey has been conducted on an national basis together with a local one directed to small firms localized in the regions of Emilia-Romagna, Puglia and Basilicata. The results show that a non-negligible share of firms seems to have realized the possible effects of the new regulations and some of them think that it is necessary to introduce relevant organizational changes. In general firms do not perceive any relevant change in banks' behaviour, but there is some dispersion in the answers on banks' reactions in credit availability and conditions. A trend towards reduction in multiple bank relationships emerges, especially among firms participating in the national survey. The local survey aimed also at evaluating the impact of Basel II on growth perspectives of Italian SMEs. These results show that the growth trend is more marked among firms localized in Emilia-Romagna, which received heavy funding from the banking system. A wider bank support seems to be lacking, in terms of assistance and consulting to firms' growth projects. In addition to this, firms' main obstacles to growth was due to difficulties in finding suitable managers and in the governance of the firm in general.banks, firms, Basel 2

Financial stability challenges in candidate countries - managing the transition to deeper and more market-oriented financial systems.

This paper reviews financial stability challenges in the EU candidate countries Croatia, Turkey and the former Yugoslav Republic of Macedonia. It examines the fi nancial sectors in these three economies, which, while at very different stages of development and embedded in quite diverse economic settings, are all in a process of rapid financial deepening. This manifests itself most clearly in the rapid pace of growth in credit to the private sector. This process of financial deepening is largely a natural and welcome catching-up phenomenon, but it has also increased the credit risks borne by the banking sectors in the three economies. These credit risks are compounded by the widespread use of foreign currency-denominated or -indexed loans, leaving unhedged bank customers exposed to potential swings in exchange rates or foreign interest rates. Moreover, these financial risks form part of a broader nexus of vulnerabilities in the economies concerned, in particular the external vulnerabilities arising from increasing private sector external indebtedness. That said, the paper also fi nds that the authorities in the three countries have taken several policy actions to reduce these fi nancial and external vulnerabilities and to strengthen the resilience of the financial sectors. JEL Classification: F32, F41, G21, G28.Europe, banking sector, vulnerability indicators, capital inflows, emerging markets.

Financial stability challenges in candidate countries - managing the transition to deeper and more market-oriented financial systems

This paper reviews financial stability challenges in the EU candidate countries Croatia, Turkey and the former Yugoslav Republic of Macedonia. It examines the fi nancial sectors in these three economies, which, while at very different stages of development and embedded in quite diverse economic settings, are all in a process of rapid financial deepening. This manifests itself most clearly in the rapid pace of growth in credit to the private sector. This process of financial deepening is largely a natural and welcome catching-up phenomenon, but it has also increased the credit risks borne by the banking sectors in the three economies. These credit risks are compounded by the widespread use of foreign currency-denominated or -indexed loans, leaving unhedged bank customers exposed to potential swings in exchange rates or foreign interest rates. Moreover, these financial risks form part of a broader nexus of vulnerabilities in the economies concerned, in particular the external vulnerabilities arising from increasing private sector external indebtedness. That said, the paper also fi nds that the authorities in the three countries have taken several policy actions to reduce these fi nancial and external vulnerabilities and to strengthen the resilience of the financial sectors

The Impact of the Global Crisison South-Eastern Europe

This paper analyzes the impact of the global crisis on six South-Eastern European countries. The main objective is to compare macro-financial conditions and policies in the run-up to the crisis as well as to compare the policy responses to it, so as to highlight, inter alia, possible country-specific constraints. While sharing a common pre-crisis pattern of strong capital inflows and robust growth, a key difference in the conduct of macroeconomicpolicies is that some countries adopted expansionary (and procyclical) fiscal policies. These moves exacerbated external vulnerabilities and compromised the ability to discretionarily use the fiscal instrument in acountercyclical fashion.Banks;Credit expansion;Credit risk;Eastern Europe;Economic growth;External debt;Financial sector;Fiscal consolidation;Global Financial Crisis 2008-2009;current account, fiscal policy, public debt, external financing, current account deficit, central bank, external borrowing, budget deficit, fiscal deficit, government deficit, fiscal stance, current account deficits, fiscal policies, account deficits, central banks, public finances, fiscal balance, structural fiscal, expansionary fiscal, government budget, foreign borrowing, foreign capital, currency board, fiscal adjustment, fiscal sustainability, fiscal rules, fiscal stimulus, domestic borrowing, government budget deficit, debt service, budget surplus, fiscal expansion, fiscal discipline, expansionary fiscal policies, fiscal tightening, fiscal balances, fiscal gaps, fiscal responsibility, fiscal gap, tax rates, short-term debt, fiscal impulse, fiscal space, fiscal council, sovereign debt, debt sustainability, fiscal reforms, fiscal deficit target, structural fiscal reforms, current account adjustment, tax administration, tax cuts, fiscal position, fiscal measures, balance sheet effects, tax revenue, external shocks, expansionary fiscal stance, fiscal targets, fiscal surplus, domestic financing, fiscal responsibility framework, private credit, medium-term fiscal sustainability, debt problems, currency risks, balance of payments, expansionary fiscal policy, private external debt, fiscal adjustments, fiscal consolidations, fiscal framework, foreign debt, currency risk, external funding, long-term debt, debt ratio, debt reduction, external shock, domestic absorption, domestic savings, expenditure cuts, debt ratios, aggregate demand, net debt, government debt, tax reforms, primary fiscal balance, repayments, fiscal target, current account balance, fiscal policy objectives, fiscal instrument, fiscal deficits, discretionary fiscal stimulus, prudent fiscal policy, budget deficits, fiscal decentralization, public finance, fiscal objectives, general budget, fiscal revenue, foreign loans, domestic financial markets, budget process, domestic public debt, tight fiscal policies, fiscal responsibility act, public debt management, debt management, external indebtedness, fiscal savings, fiscal risk, governmental fiscal relations, fiscal relations, debt outstanding, state budget, fiscal response, budgetary flexibility, responsible fiscal policy, fiscal contraction, government solvency, fiscal positions, flat tax rates, loose fiscal policies, fiscal accounts, net debtor, fiscal frameworks, fiscal stabilizers, cyclical fiscal policy, fiscal risks, flat tax, fiscal rule, fiscal action, budget system, domestic currencies, external debts, current account surpluses, nonconcessional debt, fiscal activity, tax collection, tax increases, public spending, restrictive fiscal stance, fiscal prudence, fiscal activities, central government budget, international lending, concessional debt, fiscal crisis, low debt, fiscal strategy, discretionary fiscal policy, spending cuts, tax revenues, fiscal policy coordination, liquidity injections, fiscal stability, government spending, budget expenditure, fiscal spending, fiscal outturns, fiscal imbalances, quasi-fiscal activities, fiscal liabilities, medium-term fiscal framework, fiscal coordination, public external debt, public sector fiscal deficit, revenue collection, bilateral donors, expenditure increases