Corporate Governance in the Banking Sector of the Republic of Macedonia

The aim of this chapter is to provide a comprehensive analysis of the corporate governance in the banks in Macedonia and some recommendation for strengthening corporate practices of banks. The banks in Macedonia have crucial importance in financial intermediation in the economy. Given the prevailing role of banking institutions as a source of finance in Macedonia, the good corporate governance of banks is of the utmost importance. By the implementation of good corporate practices the banks become more efficient, transparent, safe and attractive to investors. Macedonian banking law defines the framework for corporate governance in banks. However, the largest significance for the establishment of good corporate practices is the adoption of special by-laws for the basic principles of the corporate governance in a bank. There are eight principles, which will be analyzed in this chapter. The principles more clearly define standards for good corporate governance and seek to strengthen the control role of the management, adequate risk management and effective internal control systems and enhance role of internal audit. Improvement of corporate governance will contribute to the creation of a better, stronger and more sustainable banking system in the country. Strengthened corporate governance in banks remains an important objective for the development of the financial sector and the real economy.