Why Are Bank Loans Expensive in Moldova and What Are the Solutions?
Automatically translated summary. The full text is available in Romanian.
This study examines why bank loans are expensive in the Republic of Moldova. It seeks to identify the main factors that have driven up the price of credit and reduced its accessibility in recent years, a problem that became particularly acute during the recent economic crisis.
Access to credit has been a pressing issue throughout Moldova's transition period. The analysis relies on a set of indicators comparable with countries in the region, which allows a more objective assessment of the banking system and of the causes of costly loans. Econometric techniques were also used to determine the exact composition of real interest rates on bank loans and to quantify the impact of the main factors identified.
According to the estimates, the main factors explaining why real lending rates are so high are the cost of attracted funds, linked to the population's low confidence in the banking system, high risk premiums and inefficiency in banking activity. The study proposes a set of recommendations that could eliminate these problems.
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