Page 66 - Ekonomija i Biznis_septemvri 2016.indd

РУБРИКАGraph 1 Movement of nonperforming loans and HP trend of change of
nonperforming loans in the Republic of Macedonia (2004 – 2014)
Growth of total nonperforming loans
HP-trend
Cycle
Source: NBRM and own calculations
of the nonperforming loans separately
in the enterprises and in the house-
holds, using quarterly data about the
period 2003Q4 – 2014Q4 by using the
Autoregressive Distributed Lag Mod-
elling Approach (ARDL) cointegration
model. The selection of the period is
determined by the need to also cover a
period of a relative boom, i.e. the rise
of the economy, the fall, i.e. the crisis of nonperforming loans. The reasons
of the economy and its post-crisis re-
covery.
Movement of nonperforming
loans in the Republic of
Macedonia
In order to analyze the movement of
nonperforming loans in the Republic
of Macedonia for the specific period, it
is necessary to primarily diagnose the
trend of this movement. We will use
the Hodrick-Prescott (HP) filter as the
initial method for calculation of the
trend of nonperforming loans.
Graph 1 shows the change of non-
performing loans in the period from
2004Q1 to 2014Q4, summarized and
66 September 2016
presented with the HP trend. Nonper-
forming loans at the beginning of the
analyzed period have a downward HP
trend with a culmination in 2008Q3
when the growth on nonperforming
loans reached its maximum, and this
moment is followed by an upward HP
trend which shows the positive dy-
namics, that is, increase of the growth
of such movements of nonperfor-
mance loans will be explained in the
text below.
Namely, since the independence
of the Republic of Macedonia to the
first years of the new millennium,
the banking sector in Macedonia was
quite shallow and relatively undevel-
oped. This period, known as a transi-
tion period in the Macedonian histo-
ry, was followed by major structural
changes in the economy, privatization
of large companies, failure of com-
panies, military conflict. The credit
growth was weak and mostly directed
towards the enterprises which were
facing large financial difficulties. In
such conditions, the balance positions