The Impact of the Accession of Macedonia in the EU on the Banking System.

The aim of this paper is to examine the impact of the accession of Macedonia in the EU on the banking system. EU enlargement is a complex process with enormous impact on the economy of the new member countries. The financial system of the new member country, and the banking system as part of it, faces the challenge of integration in the EU financial system. The best evidence of the EU accession impact on the banking system is the analysis of the basic characteristics of banking systems of the countries that have become members in the last 20 years. The future banking development in the new EU member countries will very likely follow some main patterns known from the old EU members. In a way, banks from candidate countries can see their own future by observing the current developments in the Western European banking. The process of restructuring in the banking system through consolidation which has led to increased concentration has been one of the main drivers of changes. The existence of this process in new EU countries will be examined together with the structure of the Macedonian banking system. It is important to examine whether significant efficiency improvements have been achieved in the banking systems of the new EU countries and if they are a result of the bigger market power or some other factor. Also, there have been changes in the funding sources of the banks from the new EU countries with a lot of potentials for alternative funding. The financial crises has made these potentials evaporate, but on the long-term horizon, those opportunities will appear again. The low level of financial intermediation in new EU countries leaves space for increasing the range of financial services and their scope. [ABSTRACT FROM AUTHOR]