DETERMINANTS OF FINANCIAL DEVELOPMENT IN NORTH MACEDONIA
Keywords:
Financial Development Index, GDP per capita, inflation, domestic credit to the private sector, North Macedonia, OLS regressionAbstract
Financial development is critical for economic growth, financial stability, and sustainable development by effective allocation of financial resources and increased financial services access. Even though literature regarding the determinants of financial development has been constantly increasing, empirical evidence for North Macedonia still remains limited. In this research paper, will be examined the influence of gross domestic product per capita , inflation , and domestic credit to the private sector on the Financial Development Index (FDI) in North Macedonia during 2002-2020 period. Annual secondary data have been collected from the International Monetary Fund and the World Bank. An OLS regression analysis was used to identify the impact of macroeconomic variables chosen by us on financial development. Based on the obtained empirical results, it should be stated that GDP per capita and domestic credit to the private sector positively affect the Financial Development Index, while inflation negatively influences it, though insignificantly. In conclusion, it can be stated that economic growth and increased credit access are crucial factors determining financial sector development in North Macedonia.
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