Azerbaijan's Financial System and Macroeconomic Dynamics: A Banking-sector-focused Analysis (2021–2024)
Huseyn Ramazanli 
Abstract. This article examines the structure of Azerbaijan's financial system and its relationship with macroeconomic developments during 2021–2024. Particular attention is given to the dominant position of the banking sector within the financial system, the regulatory functions of the central bank, and the role of the state in financial markets. The analysis shows that the financial system rests on a two-tier banking structure and that financial resources are mobilized largely through banks. It also emphasizes the central role of the Central Bank of Azerbaijan in monetary policy, the preservation of financial stability, and the supervision of the banking sector. The Azerbaijan Deposit Insurance Fund is shown to strengthen confidence in the financial system by improving deposit security. The banking sector's control of approximately 95% of financial-system assets indicates that the system is organized around banks. An examination of macroeconomic indicators reveals a general upward trend in GDP, household income, wages, investment, and credit volume during 2021–2024. Over the same period, however, the external balance remained volatile under the influence of energy-price fluctuations and global economic conditions. The labour market displayed employment growth together with an uneven unemployment profile. Overall, the article concludes that financial markets represent an important channel through which economic growth is supported.
Keywords: financial system of Azerbaijan, banking sector, central bank, macroeconomics, credit system, economic growth