Analysis of the Financial Deepening Of Macedonian Banking System during the Global Financial Crisis

Most of the contemporary literature had confirmed the importance of financial institutions and market, also the vital role they are playing in the process of economic growth and development of a country by facilitating savings and channeling funds from savers to investors. Financial intermediation of growth leads to financial deepening, which refers to the greater financial resource mobilization in the formal financial sector and the ease in liquidity constraints of banks and enlargement of funds available to finance. Without any doubt, the financial sector is very important factor of economic growth and household welfare. Without a developed financial sector, for example, domestic savers and foreign investors would be more hesitant to part with their money to otherwise sound investments, resulting in lower economic outputas measured by GDPand household welfare. A well-developed financial system enables firms to expand production and provides households with the ability to obtain essential assets like a house, insure against income shocks, start a company, receive cheaper remittances, and enjoy a pension when they retire.Keywords: baking system, financial deepening, credit growth, credit, deposits