Comparative Perspective of Financial Sector Development of Two EU Candidate Countries in Transition: Albania and Macedonia

Abstract

Albania and Macedonia in a difference of two years met the important criteria of the accession imposed from European Union and now they are candidate countries. These two countries are transition economies of the Western Balkan or known as South- East European countries and regarding the latest international official reports they have been progressing through the financial sector reform and economic growth. This study aims to investigate on the progress of the financial sector of two neighborhood economies and specify the characteristics and commonalities this sector share. Based on statistic data of World Bank (WB) and European Bank for Reconstruction and Development (EBRD) this study will firstly cover an overview of the macroeconomic situation of Albania and Macedonia. The transition situation and the neighborhood of these economies impose the idea of a lot of commonalities but specifically the study will effort the specification of the differences between them. The Financial sector reform and development covers most of the study through the compare of main financial indicators of Albania and Macedonia and their relation to the economic growth. In specific the focus is on the banking sector indicators through the evidences on the ownership of the capital of the banks, their ratio on the state capital or foreign one, privatization method of the banking public sector, difference in the lending and borrowing rates etc. These two economies are as near as far from each other despite similar rules and regulations especially on the financial sector.