Naslov
Reforming the Banking System in Croatia and its Broader Macroeconomic Environment
(Banking Reforms in South-East Europe)

Autori
Jovančević, Radmila

Vrsta, podvrsta i kategorija rada
Poglavlja u knjigama, znanstveni

Knjiga
Banking Reforms in South-East Europe

Urednik/ci
Šević, Željko

Izdavač
Edward Elgar Publishing

Grad
Cheltenham : Northampton (MA)

Godina
2002

Raspon stranica
241-259

ISBN
1 84064 377 3

Ključne riječi
new banking system in Croatia, foreign exchange deposits, confidence in the banking system

Sažetak
The creation of a new banking system in Croatia played out under exceptionally difficult circumstances (economic transition in a war situation). The monetary policy of 1993/94 suppressed inflation, but its restrictiveness together with the fixed exchange rate reduced both employment and production. The increase in foreign indebtedness did not succeed in sparking the expansion of production (or even employment for that matter), and as a consequence, the exhausted economy will have a tough time servicing its foreign debts. In Croatia, where citizens hold around 93.3 per cent of their savings in foreign exchange deposits, confidence in the banking system is of great importance. The interest rate spread is very large, which enabled banks to afford high salaries for their staff in 1998. Banking reforms in Croatia were undertaken primarily to refined legal regulations (The new Banking Law in 1998). It also strengthened capabilities of the CNB to intervene with regard to the control and audit of banks. Namely, banks were too susceptible to the individual, or rather to a group of mutually connected individuals. As a result, banks took exceedingly high risks. This is a negative experience in the banking practice in Croatia. Therefore, the new law more restrictively regulates the susceptibility of banks to connected persons. The banking reforms, however, did not increase the total liquidity of the economy. Its illiquidity was instigated by the bankruptcy of banks whose greatest problems were caused by risky speculation, ignorance or the bad management of their administrations. The arrival of foreign banks did not, however, have the expected effect of increasing the competitiveness and efficiency of domestic banking. The profits from the sale of the state’s share in the large banks were for the most part used to cover deficits in the budget, the Pension and in health insurance Funds (which are chronically in deficit). Economists believe that these sums would be more effective if used to promote economic growth. It is obvious that the profits from sales in the forthcoming period will not be able to achieve sums as large, and a decrease in budgetary spending and in the funds is an inevitability. A turnaround in economic policy in general should be based on encouraging exports and savings (of the state, the population and of firms).

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA