THE IMPACT OF THE MACROECONOMIC FACTORS OVER THE PROFITABILITY OF THE BANKING SECTOR IN REPUBLIC OF NORTH MACEDONIA

Abstract

Monitoring and assessment of the profitability of banks and the banking sector as a whole, presents a serious challenge, especially in the environment in which they operate today. The needs and demands of the clients are constantly increasing and changing, as well as the regulatory requirements, which influence the banking operations process, their efficiency and effectiveness. The purpose of this research is to analyze the performance of the banking sector in the Republic of North Macedonia, considering the trends of 15 Banks in banking industry between 2009 and 2019. This research considers an empirical model by applying various methods, in order to perceive the results of the sector and to identify trends in the key indicators and the macroeconomic factors affecting the performance. For the empirical model it is used secondary data on the performances for the banking sector published by the NBRM, as well as data from the banks' financial statements. The results show a strong connection of the profitability, inflation and average net salary growth, and weak connection between the profitability and GDP growth, where the reference rate of the CB Bills as a factor is statistically insignificant.