Comparison of the Macedonian and Croatian banking system
Comparison of the Macedonian and Croatian banking system

Summary/Abstract: The Republic of Macedonia and the Republic of Croatia have both been federative republics in the ex-SFRY federation until 1991. Both countries received their EU candidate status in 2007 and Croatia approached the European Union in July 2013, whereas Macedonia has retained the candidate status. This is why many people believe that both countries have so much in common. Considering this fact, it is a great challenge to try and elaborate on their differences in the banking systems, besides the first impression that there are many shared similarities of both countries. The subject of this research are the banking systems in both countries, their performances, profitability, and efficiency during the past decade. The banking sector in each country is a very specific and crucial segment in the economy, especially in such bankocentric economies present in both analyzed countries. The main objective of this paper is to stress the fact that even though originating from the same country, both republics have developed under different circumstances and thus, there are inevitable differences in their banking systems and their (under)development. Other objectives of this paper are to emphasize the differences in order to clarify the areas and the reason why the Republic of Macedonia (or, its banking system) shows lower performance, and where the performance is better and could be used as an example in other countries further on in the future. The main hypothesis in this study is: Even though both countries seem to be relatively similar regarding all the sectors of the economy, their banking sectors are showing differences in performance, efficiency and structure of the financial systems. Is the Macedonian banking system efficient compared to the Croatian? What lessons could be learned? The methodology used in this research is historical, comparative and analytic method. The findings were consistent with the hypothesis. Both banking sectors have similarities, but they also differ in their structure as well as the structure of the financial systems. The Macedonian banking system has not showed extraordinary results in the past decade, and has better performance than the Croatian one only in the past 2 years. However, the performance indicators do not indicate that the banking system has developed. It rather shows the struggle the Croatian banking system is facing due to the 7th year of recession. The main conclusions of this research have shown that the Macedonian banking sector has not been efficient enough, and a consolidation of the sector is needed in order to stimulate more efficient operations.

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