Due to the banking crisis, the market share of the non-banking sector more than doubled from 7.1 percent in 2013 to 16.4 percent in 2017, said expert Veaceslav Ionita, of the IDIS Viitorul think-tank, during the presentation of the paper “Economic Outlook: 2018 – A Year of Reform or Stagnation?”.

If the growth pace is maintained, the non-banking lenders could reach a market share of 20% in three years. The growth is mainly due to micro-financing services, which is expected to amount to 4.55 billion lei in 2017, a 760 million lei increase on the previous year.

“In fact, what we see is the banking sector lending to the economy via the micro-financing companies. After the National Bank stepped up supervision dramatically, banks have become very prudent and avoid lending to risky ventures. So micro-crediting companies have become increasingly attractive to the small companies. To cope with the rising demand, the micro-crediting companies are in turn borrowing from commercial banks.”

Ionita noted that this produces a supervision gap, suggesting that the National Bank and other governmental watchdogs should address this issue.

The expert also mentioned the inadequate economic literacy of the general public, who often disregard the fine print when borrowing. However, Ionita sees little reason for concern at this point, as the quality of loans in the non-banking sector is about six times higher that in the banking sector, with the share of non-performing loans being 2.5-3.5%, in contrast to 16% at the banks.

So the 2014 banking sector had a surprising effect: the accelerated growth of the non-banking services, and this, concludes Ionita, calls once again for steps to create separate regulation for the non-banking lenders.