Financial Systems Integration Of Balkan Countries In The European Financial System

This paper aims to show the impact of financial variables on the process of convergence between selected European Union and Balkan countries. Indeed, after a delay in the realization of structural changes - result of historical legacy and circumstances in which the transition process took place - Balkan countries started at the end of 1990s essential reforms in their financial systems with the adoption of concrete measures directed towards the growth and increase of the financial sector efficiency. So, using panel data over the period 1999-2007 for a sample of 21 countries, we test the convergence's hypothesis by the Bayesian iterative estimation method; two financial variables are introduced to control the differences in steady state. Our empirical results sustain the importance of the domestic credit and the market capitalization in the catching-up process by a significant increase in the speed of convergence.

Financial industries in central, eastern and south-eastern Europe have undergone dramatic changes over the past decade. Foreign direct investment contributed to the development of market-oriented banking and financial systems able to support the rapid pace of economic growth in these countries. Policymakers, academics and private sector analysts have contributed to this volume with their stimulating insights on a broad range of issues, from recent credit booms to the cross-border integration of banking and capital markets. Anyone who wants to understand how finance, growth and financial stability interact in transition economies should read this book. Mario Draghi, Governor of the Banca d Italia and Chairman of the Financial Stability Forum This book highlights the achievements and challenges of the ongoing process of financial integration in Europe. The financial integration of Europe is both welcomed as an economic driving force and watched with concern as a source of potential stability. After all, changing financial, regulatory and corporate ownership structures are fuelling competition, capital mobility and financial intermediation, but at the same time creating new systemic risks. With a special focus on Central, Eastern and South-Eastern Europe, the contributors to this book explore a wide spectrum of underlying issues, including the finance-growth nexus, credit boom patterns, the implications of foreign bank entry modes, lessons learned from old EU member states and commercial bank strategies. Authoritative views from central bank officials and policymakers are complemented with a special focus on empirical and econometric evidence from academia as well as practical insights from key financial market players. This unique collection will be of great interest to economists and experts in the fields of financial markets and European integration from central, commercial and investment banks, governments, international organizations, universities and research institutes.

Following a decade of conflicts, Western Balkan countries accomplished robust economic growth in the 2000s. This growth pattern was domestic demand driven and externally financed, hence was hampered significantly by the global financial crisis and subsequent euro area debt crisis. Despite modest post-crisis recovery, the region continues to struggle with structural problems that undermine economic growth. Prospects for the region remain significantly dependent on external developments--but also progress on structural reform agendas. Against this backdrop, further financial deepening and improved financial stability are essential to boosting sustainable growth. The size and structure of the financial sector varies considerably across the Western Balkan countries and is primarily bank-based. In the near term, policymakers and regulators in the region face a number of challenges with regard to supporting economic growth, expanding financial inclusion, and maintaining financial stability. Banking regulation and oversight have improved over the last decade, but a number of important shortcomings in some segments remain. The book is arranged as follows: While the snapshot in Chapter one focuses on near term challenges and policy responses with regard to financial sector development and stability, the following chapters look more broadly at the external context and take a longer term view on challenges and opportunities that could present themselves over the next decade. It does so not by proposing a single forecast, or view of the future, but by exploring key uncertainties and applying the tool of scenario thinking to create three different visions for the world around the Western Balkans financial systems in 2025 aimed at informing the development of financial sector strategies that contribute to the country's overall success in sustainable and inclusive growth.

This title explores ways for the Western Balkan countries to improve growth prospects through deepening of regional integration and improving selected elements of their investment climate. It analyzes areas relating to trade in goods and services, regional integration, and selected aspects of the investment climate. It suggests that countries in the region could reap sustained growth payoffs by focusing on deepening regional integration, improving human capital, reducing telecommunication costs and pre-empting energy shortages.

First published in 1999, Kostis in this book traces the influences Western modern banking systems in Balkan states and the economic development of these countries. The contributors of this book consider a wide arrange of approaches in relation to issues of western-European influence in Balkan countries with the aim to create a further discourse in this subject.

This paper looks at the key trends of financial integration and analyzes the degree to which Western Balkan countries are internationally integrated in financial flows. With the aim of reviewing the development of financial integration in the region some the experience of Western Balkan regions will be examined by conducting cross-country comparisons. The analysis focuses on the Western Balkans region by examining a set of financial indicators, but it will be useful to see the comparative view to the European perspective (EU 3 countries). To the purpose of cross country comparison, several important financial integration indicators related to financial openness and financial deepening are considered. The data for eight transition countries was sourced from the World Bank - World Development Indicators, IFS (International Financial Statistics), and WEO. For needs of the size and composition of capital inflows countries of the Western Balkan and EU 3 countries data are drawn from balance of payment selected countries. The paper provides two key insights. First, the financial systems in sample of analyzing countries are still at an earlier stage. Second, the median volatility of Portfolio investments (as % of GDP) is shown substantially less than the median volatility of Loanto-GDP ratio and median volatility of FDI flows-to-GDP ratio. Also, the coefficient of variation for the Western Balkan region as well as EU3 countries reveals that the Loanto-GDP ratio is less volatile than the FDI inflows to GDP ratio.

The boom and bust in capital flows to the New Member States of the European Union have received a considerable amount of attention; foreign direct investment and bank flows to the region and countries’ participation in regional supply chains have been well-documented. Relatively little has, however, been written about capital flows to the Western Balkans economies, which are often perceived to be ‘late arrivals’ to large capital flows. This paper aims to examine how capital flows to the Western Balkans compare with flows to the New Member States, in terms of levels as well as dynamics. We find that while financial integration took off somewhat later in the Western Balkans than in the New Member States, it has increased rapidly, despite still much lower capital account openness. Capital inflows as a share of GDP are comparable to those observed in the New Member States, (perhaps surprisingly) diverse in terms of source countries and broadly similar in composition, though with equity shares higher than they were in the New Member States at comparable levels of GDP per capita.