The Impact of the International Banking on the Macedonian Banking Sector in the Global Financial Crisis

The financial crisis of 2007-09 was a major test for the global financial system as a whole. Without the influence of the international banks over domestic banking operations, the global financial crisis would instead have been several national banking crises, not necessarily erupting at the same time and with far fewer contagion effects – but probably with (even) greater damage to the nations hurt most. But international banks also provide substantial benefits to the economies they operate in – during the crisis, e.g., the presence of Western European banks had a stabilizing effect on credit flows in the Eastern Europe and West Balkans countries. For some time during 2008 and 2009, it looked as if one of the most fundamental trends the banking industry underwent in the past decades – the internationalization of their business activities – might be dealt a serious blow. The crisis brought the return to center stage of the state, as an investor of last resort and as a rule-setter, and by nature national governments focus on national markets. Virtually unprecedented global turmoil in financial markets and an ensuing ―heart attack of the real economy that at times looked like the beginning of a second Great Depression led to extreme uncertainty in the banking sector and made managers refocus on the very core of their banks’ activities – attention concentrated on the home market business. Stabilization measures by national governments gave a further push in that direction as they often came in exchange for banks’ committing to continue lending towards domestic clients. However, in a period of restructuring, shrinking and deleveraging, this implied fewer resources were available for international operations. This paper aims to analyze the changes of the banking policy of the international banks as result of financial crisis loses as well as to analyze that impact that the international banks have made to the banking sector to Macedonian banking in terms of creating better or worse lending environment. The analysis would be also speared over the issue whether the international banks import the post-financial crisis symptoms from their origin countries