The Central Bank of Azerbaijan (CBA) CEO Shahin Mahmudzade has said that Azerbaijan is not yet ready for a high concentration of banks. This was reported by FinFly.
According to him, concentration in the banking sector exists in all countries where systemically important banks operate: "In such countries, individual banks hold a larger market share compared to others. This is a characteristic feature for most of the more than 130 countries worldwide."
"The key issue is the level of concentration and the mechanisms for regulating it. Over the past four years, concentration in Azerbaijan's banking sector has actually decreased. In other words, the market share of large banks has shrunk, while the positions of smaller banks have strengthened somewhat," Mahmudzade noted.
He also pointed to differences in funding costs for large and small banks. "Moreover, large banks have broader opportunities to interact with the real estate sector and other systems. The introduction of any restrictions — whether in licensing or other areas — could lead to further growth in market concentration. Azerbaijan has a moderate level, and we are not yet ready for a high one," the CBA head added.
