Romania has the lowest degree of financial intermediation in the European Union, with a value of 25.7% in 2018, three times lower than the EU average, according to the most recent study by PricewaterhouseCoopers (PwC), consulted by energynomics.ro.
The study conducted at the request of the Romanian Banking Association shows that ROBOR rates at 3 and 6 months have been on a declining trend since 2009, turning up from 2017 onwards, „in line with inflation.”
„Although low interest rates should have boosted lending, financial intermediation has been on a steadily declining trend,” says the study, which calculates financial intermediation as a ratio between credit to the private sector and GDP.
Thus, Romania is below the EU average of 83%, in terms of financial intermediation, but also below that of emerging economies (Poland and the Czech Republic – 52%, Bulgaria 51%).
Although low interest rates should have boosted lending, financial intermediation has been on a steadily declining trend. The decrease in financial intermediation was generated by a series of factors, the most important being the volatility of the legislative framework and the precarious economic situation of SMEs (negative capital, profitability and declining liquidity). The decrease in financial intermediation also contributed to the process of clearing bad credit balances started by banking institutions in the immediate aftermath of the crisis.
