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It is accepted throughout the world that well designed deposit insurance is an important element in a national safety net for maintaining and extending the stability of the financial system. A key function of deposit insurance is to provide a credible safety net for depositors, which is beyond doubt, including in times of crisis. Still, the design and structure of a deposit insurance scheme (DIS) depends from numerous institutional, procedural and instrumental questions. The designs of DIS of course is important because every insurance scheme produces certain level of moral hazard and affect private market discipline, banking stability, financial development, and the effectiveness of crisis resolution. There are few characteristics of Macedonian banking system that must be taking in to account in order to determine optimal DIS for Republic of Macedonia: concentration of the banking system, ownership of Macedonian banks, supervisory regime and the nationality of depositors. This paper will analyze the best practices for DIS regarding their funding, the coverage ratio and their architecture. Our DIS is ex ante funded but doesn't take in to account the riskiness of its members. In addition, the size of DIS, because of the concentration in the banking system, cannot cover fall of large or some of the medium banks, so the main question is how effective it will be as part of our safety net in such a case. These questions will be addressed through the developments in DIS after the financial crisis from 2008. [ABSTRACT FROM AUTHOR]

The aim of this paper is to elaborate the impact of the changing environment on the services that the banking sector is providing. The trends in the international banking will be analyzed also from the perspective of the banking activities on Macedonian banks. Speaking of changes, there are two tendencies that can be determined in the international banking: 1) increased competition that influence on the banking products and pricing, 2) technology improvements that affects the distribution channels of selling and the operating cost on the banking activities. Increased competition and sharing the same target market along with other financial institutions affects the banks' market share and prices of their products. In developed economies there is a trend of suppression of banks from certain market segments and reducing their market share. This trend is mostly expressed in USA and is less pronounced in EU. Also rapid technology development and penetration of Internet in everyday life doesn't leave immune nor the banking sector. The technological improvements affect the banking industry through introduction of new products, increasing efficiency in terms of operating costs and developing new distribution channels. Banks are forced to adapt their products to a new generation that is coming and who grew up in the Internet Age. The biggest changes have been made in terms of payment methods by allowing transactions to be made 24 hours a day from anywhere. The development of technology also affects on the improvement of data bases which enable better assessment of credit risk to individual products and customers. Banks along with other financial institutions are joining in collecting and sharing of customer data that enables better assessment of the credit risk. [ABSTRACT FROM AUTHOR]

The aim of this paper is to elaborate the importance of service sector and how its future development will affect the banking industry in the Republic of Macedonia. We live in a service society, where services sector represents more than two-thirds of economic activity and four-fifths of growth in recent years in OECD countries. This trend is evident in Macedonia also, where the service sector represents around 60% from the economic activity. Stil, because of the positive correlation with the economic development, further development will result with growth of the service sector. Further liberalization, removing product market barriers still limiting competition in various sub-sectors, allowing more FDI are factors that are indicated by experts that can contribute for further development of the service sector.Regarding banking industry in Macedonia, service sector has the biggest share in the credit portfolio. Especialy this is due of the high exposure towards trade.Comparative analysis with developed countries shows that the share of exposure towards service sector is greather in Macedonia. This is mainly due of the lower risk of this credit portfolio, whose average riskiness is below the industry sector and agriculture.Also, in deficiency of strong industrial sector who can export its goods, Macedonian banks are turned towards wholesale and retail trade sectors. So it is expected with growth of GDP per capita in future banks to increase the loan portfolio of industry and in the same time to decrease the share of trade sector portfolio in total service portfolio. [ABSTRACT FROM AUTHOR]