Romania Financial Sector Assessment Program : Financial Intermediation
Banking financial intermediation relative to the economy is low and declining. The depthof the Romanian banking sector is lagging both in terms of deposit and loan penetration. Cross-cutting factors such as poverty, rurality and informality form a...
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| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/336941532706212912/Romania-Financial-sector-assessment-program-financial-intermediation-technical-note http://hdl.handle.net/10986/30220 |
| Summary: | Banking financial intermediation
relative to the economy is low and declining. The depthof
the Romanian banking sector is lagging both in terms of
deposit and loan penetration. Cross-cutting factors such as
poverty, rurality and informality form a set of constraints
that still persist affecting both financial inclusion and
intermediation. On the demand side, credit needs remain
limited due to low enterprise density, poor health of
enterprises, especially micro-enterprises, relatively high
number of foreign owned firms, and increasing use of other
forms of financing. Furthermore, while economic growth had a
positive spillover, this did not translate into a
commensurate increase in corporate investment activity. On
the supply side, banks have been adversely affected by high
Non-Performing Loans (NPLs) and deleveraging pressures. Gaps
in access to finance persist, especially for micro, small
and medium-sized enterprises (MSMEs), start-ups, and in
rural areas. The emergence of banks with niche market
positioning could reverse the disintermediation trend, but
should be aided by measures to improve the health,
performance, and skills of enterprises. Macroprudential
measures to protect against excessive sovereign exposures
could also, at the margin, support financial intermediation. |
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