George Abuselidze

Salome Dumbadze


The current economic processes in Georgia had a significant impact on the banking market. In the dynamics of certain period, a number of commercial banks faced the problem of financial stability, to eliminate which it was necessary to mobilize additional monetary resources. It is important to analyze the difficult financial and economic situation in the country, which to a certain extent has caused significant changes in the banking sector. This situation has put the creation of a competitive environment on the agenda in the banking market as an important actor for maintaining the stability and economic sustainability of the financial sector. It should be noted that the current situation in the banking market was somewhat positively reflected, as national banks began to provide a competitive environment. The existence of a healthy competitive environment is ultimately a prerequisite for the development of a developed and financially sustainable competitive banking sector. The paper discusses the data reflected in the banking market over the last 5 years, on the basis of which we conducted an in-depth study and studied the interbank competitive environment. We have calculated interbank competition by means of relevant indices, and suggestions for its improvement are offered in the paper.

Keywords: interbank competition; economic shocks; concentration ratio

JEL Codes: E42; E43; E44; E58


Abuselidze, G. & Sharabidze, M. (2021). Competition in the Georgian banking sector and its impact on the credit policy of commercial banks. MATEC Web of Conferences, 342, 08003. DOI: 10.1051/matecconf/202134208003

Abuselidze, G. (2021). The impact of banking competition on economic growth and financial stability: an empirical investigation. European Journal of Sustainable Development, 10(1), 203-220.

Abuselidze, G. & Kizinidze, M. (2019). Influence of central bank regulations on interbank competition in association with EU. E3S Web of Conferences, 135, 04037. DOI: 10.1051/e3sconf/201913504037

Astuti, U. H. W. & Saputra, P. M. A. (2019). Efficiency and competition in banking industry: case for asean-5 countries. Scientific annals of economics and business, 66(2), 141-152. DOI: 10.47743/saeb-2019-0011

Bolt, W. & Humphrey, D. (2010). Bank competition efficiency in Europe: A frontier approach. Journal of Banking & Finance, 34(8), 1808-1817. DOI: 10.1016/j.jbankfin.2009.09.019

Dutta, K. D. & Saha, M. (2021). Do competition and efficiency lead to bank stability? Evidence from Bangladesh, Future Business Journal, 7(1), 1-12. DOI: 10.1186/s43093-020-00047-4

Gegenava, G. (2018). Commercial banks- their importance and role in small and medium business development. Caucasus International University. Retrieved from https://openscience.ge/bitstream/1/74/1/Giorgi%20Gegenava.pdf?fbclid=IwAR2D_nM33UNn_ODu1D3ee-56xEP-ar3Hl-tWhZ0giMXDPWoBUfUdbshmZuE

Kovzanadze, I. & Kontridze, G. (2014). Modern banking: Theory and Practice. Tbilisi.

Marius Andrieş, A. & Căpraru, B. (2012). Competition and efficiency in EU27 banking systems. Baltic Journal of Economics, 12(1), 41-60. DOI: 10.1080/1406099X.2012.10840510

Namchavadze, B. (2016). How the Georgian banking system develops, a historical overview is sought. Retrieved from https://forbes.ge/rogor-vithardeba-qarthuli/?fbclid=IwAR3Aynhn62wtjNEhBTog1mpiCj00Bm0BO9_0WMUGCQziVl_bAmvKyKZPiMU

Phan, H. T., Anwar, S., Alexander, W. R. J. & Phan, H. T. M. (2019). Competition, efficiency and stability: An empirical study of East Asian commercial banks. The North American Journal of Economics and Finance, 50, 100990. DOI: 10.1016/j.najef.2019.100990

Pruteanu-Podpiera, A., Weill, L. & Schobert, F. (2016). Banking Competition and Efficiency: A Micro-Data Analysis on the Czech Banking Industry. In: Brada, J.C., Wachtel, P. (eds) Global Banking Crises and Emerging Markets. Palgrave Macmillan, London, 52-74. DOI: 10.1007/978-1-137-56905-9_4

Saif-Alyousfi, A. Y., Saha, A. & Md-Rus, R. (2020). The impact of bank competition and concentration on bank risk-taking behavior and stability: Evidence from GCC countries. The North American Journal of Economics and Finance, 51, 100867. DOI: 10.1016/j.najef.2018.10.015

Legislative Herald of Georgia (2014). Low “On the approval of the rules for the classification of assets and the creation and use of reserves for possible losses by commercial banks”. Retrieved from https://matsne.gov.ge/ka/document/view/2372714?publication=0&fbclid=IwAR3br9SkBvjKKQDchXpJa5NAO6MdtSWScGarZJZIWaYHlRBKxTS5Hi5EiIQ

National Bank of Georgia (2022). Annual financial statements. Retrieved from https://nbg.gov.ge/supervision/banking-supervision

National bank of Georgia (2022). Annual Report of Pillar 3. Retrieved from https://nbg.gov.ge/supervision/banking-supervision?pageKey=pilar3Annual

National Bank of Georgia (2022). Quarterly reporting of Pillar 3. Retrieved from https://nbg.gov.ge/supervision/banking-supervision?pageKey=p

Full text: PDF (English)

To cite this article: Abuselidze G., S. Dumbadze (2023). Empirical analysis of interbank competition and directions for its improvement. Entrepreneurship, 11 (1), 48-60 DOI: 10.37708/ep.swu.v11i1.5