New Banking Regulations and Their Effect on Economic Activities in Georgia

Abstract

The functioning of the commercial banking system plays an important role in the development of the state under the transformed economy. Also, the economic growth rate of the country stands for the stability of the banking sector. The problems of commercial banks and other subjects of financial sector are instantaneously affecting other areas of economy. The modern Georgian banking system was founded after the collapse of the USSR and the independence of the country. By 1995 the number of banks was more than 100 that was reduced to 16 in 2017. At present, the National Bank of Georgia is supervising the financial sector, which is obliged to analyze and elaborate policies to reduce risks and stability to the minimum. The purpose of the work is to study new banking regulations in Georgia, which entered into force from January 1, 2019 and radically changed the existing lending policy. The article analyzes the regulatory situation as a bank, as well as for business sector and consumers. The work is based on both qualitative as well as quantitative methods of research, in particular analyzing official documents and legal documents and statistical data to make clear the distinction between before and after the regulation period. The recommendations developed based on the results of the research have a practical purpose that can be used when developing various state documents for the regulation of the financial sector.