LOAN PORTFOLIO OF BANKS AND ECONOMIC GROWTH
LOAN PORTFOLIO OF BANKS AND ECONOMIC GROWTH

Summary/Abstract: Economic growth is the main element which helps to improve the stability of an economy and the standard of living in a country. There are many factors that have impact on economic growth which can be divided into factors that impact aggregate demand and factors that affect aggregate supply. Factors that affect economic growth can be mentioned as above: exchange rate, interest rate, real wages, banking system, investments, technological development etc. This study is focused on the analysis of banking system as main participant in the financial system of the Republic of North Macedonia where around 90% of financial system is consisted by banks. The main objective of the paper is to describe, compare, analyze and measure the impact of the loan portfolio of banking sector in Macedonia in economic growth. To make the model we are based on quarterly data which are taken for the period from the last quarter of 2004 to the second quarter of 2018. For data processing we use econometric model, concretely the simple linear regression model where obtained results help us to come to conclusion that the growth on the loan portfolio of banks has positive impact on economic growth. But we also need to highlight that the positive relationship between these two variables isn’t so strong, where we can say that loan portfolio isn’t the main factor that has the higher impact on economic growth.

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