EFFECTS OF THE ENTRANCE OF FOREIGN CAPITAL IN THE MACEDONIAN BANKING SECTOR.

Internationalization of the banking sector has had a tremendeous impact on financial integration and economical development. It offers banks the possibility to determine and establish their optimum size, to provide economies of scale and range, to diversify their activities and to increase their revenue and profitability. The purpose of this paper is to determine the effects of the entry of foreign capital in the banking sector in the Republic of Macedonia. The results of the research show that despite of the large number of conflicting opinions in relation to the benefits from FDI in banking, in the case of the Republic of Macedonia, it can be concluded that in general, the effects were relatively positive and they appeared in the form of increased loans, modernization of the equipment and technology used by the banks, as well as greater availability of services to banks, due to the investments in the opening of new branches and offices in the country. The entrance of foreign banks and groupations in the Macedonian banking sector resulted in higher competition, decreased prices of banking products and services and lower number of banks on the market. The consolidation of the banking industry stimulated strong competition, where competitors are more capable, offer better quality of the bank services and products, as well as new products and services. [ABSTRACT FROM AUTHOR]