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The impact of macroeconomic and financial factors on shadow banking in the new EU member states

Author

Listed:
  • Jordan Kjosevski

    (Independent researcher Pitu Guli 5, Ohrid, The Republic of Macedonia)

  • Mihail Petkovski

    (University Ss. Cyril and Methodius in Skopje, Blvd. Goce Delchev 9V, 1000 Skopje, The Republic of Macedonia)

  • Aleksandar Stojkov

    (Iustinianus Primus Law Faculty, University Ss. Cyril and Methodius in Skopje, Blvd. Goce Delchev 9b, 1000 Skopje)

Abstract

The goal of this paper is to examine the impact of macroeconomic and financial determinants of the shadow banking dynamics in the selected 11 new EU member states using yearly data from 1999-2018. We apply three methods: fixed effects model, the difference-GMM and the system-GMM (Generalized Method of Moments). Empirical results provide evidence that the most important factors are the developments in the financial sectors (insurance and pension sectors), banking sector, money market rate, as well as the general economic growth. We also found that global financial crisis has a negative impact on the shadow banking growth. From the results we may conclude that traditional banks, insurance sector and pension funds are complementary with shadow banking. This results was opening new issues for macroprudential policy, bearing in mind the Basel III norms. Namely, one of the main goals of Basel 3 is to reduce procyclicality of bank lending, and the rise of shadow banking may have an impact on both capital-based regulation and income-based limits.

Suggested Citation

  • Jordan Kjosevski & Mihail Petkovski & Aleksandar Stojkov, 2020. "The impact of macroeconomic and financial factors on shadow banking in the new EU member states," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 38(2), pages 407-427.
    • Handle: RePEc:rfe:zbefri:v:38:y:2020:i:2:p:407-427
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    References listed on IDEAS

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    More about this item

    Keywords

    shadow banking; EU new member states; panel data analysis;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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