CHALLENGES OF THE MICROBANK AS A NEW REPRESENTATIVE OF THE FINANCIAL SECTOR
Authors:   St. Tbel Abuserisdze University, Beridze Lasha , Tsinaridze Ramin ,   Batumi Shota Rustaveli State University
Published: June 2024

An important role for developing economies is played by the volume and facilities of business and population lending. Although the financial sector of Georgia has been characterized by stability in recent years and the volume of the sector is increasing, this growth was not the same for all participants in the sector and certainly effective for business and the population, because the commercial banks and insurance sectors are characterized by increasing trends from the financial sector and microfinance organizations and the securities market are characterized by a relatively decreasing trend. It is recognized that the development of the financial sector and high competition ensure greater access to finance and alternative resource investments. High interest rates are a challenge for the state, but it is logical that the existence of competition in the financial sector alone cannot ensure its reduction. Participants of the financial sector need liquid assets to manage and effectively dispose of their own and raised funds, therefore, in this process, the supervisory body of the financial sector - the National Bank conducts a number of measures, which derives from and depends on the current economic situation in the country. It is with this logic that a new decision was made, which created microbanks and which should take the place of an intermediary link between commercial banks and microfinance organizations. The world does not have a long history of microbanking experience, but we are certainly familiar with the classification of commercial banks by specialization, and the United States of America is a clear example of this. Commercial banks in Georgia operate on the principle of universality, and they include financing of loans of any field and volume in their portfolio. Microbanks, based on their name, indicate a relatively reduced/truncated version of commercial banks, which should be focused on financing relatively small volumes of loans, unlike commercial banks, but we understand that microbanks will have to enter into competition with both microfinance organizations and commercial banks, therefore, how much its creation will justify the goals of creation will be assessed by observing the practice, which requires time. The task of the research is to evaluate and analyze the creation of an intermediary link between microbanks as new participants in the financial sector, commercial banks and microfinance organizations. Commercial banks operate on the principle of universality, and their portfolio includes financing loans of any field and volume. Microbanks indicate a relatively reduced/truncated version of commercial banks, which should be focused on financing loans of a relatively small volume, unlike commercial banks. The subject of the study is the necessity and reasons for creating a new representative of the financial sector of Georgia, and the object of the study is the financial and statistical indicators of banking and non-banking institutions in the financial market of Georgia. The following methods of scientific research were used to solve the set goal: analytical - for collection, summary; Analogies and comparisons - determining the impact of a new "player" on the financial sector; Generalization - for formulating conclusions based on research results.