Treatmeant of large exposures regime in macroprudential approach vs microprudential – the Republic of Moldova example

Abstract

Banking service market challenges managing compliance costs in the same time, and diversifying in front of the clients through innovation of products and services, which needs a higher level of analysis to be adequately compliant and to ensure a profitable and sustainable model of business. Moreover, Moldovan credit institutions are facing a challenge in managing their balance sheets through the perspective of assets quality and rising incomes and with the consolidation of banking sector tendency, which induce the need of adaptation for all market players. In this context, the demand for products with big values and risks from the clients are restricted by prudential norms are being ready to be adopted. For this reasons, this article aims to study how the norms regarding the treatment of large exposures limits the capacity of lending, and to gain bigger profits for small and medium banks, thus the regulations favor big banks and creating even a bigger disruption on a competitive market.