Ardita BYLO, Ph.D.
Assistant Professor, University of New York Tirana
Elena MEMUSHAJ
University of New York Tirana
ABSTRACT
This research aims to examine the relationship between banking sector development and economic growth in Albania, focusing on specific indicators such as bank capital to asset ratio, non-performing loans, credit to the private sector, deposit money bank assets to GDP, inflation rate, GDP growth, and GDP per capita growth.
The study is grounded in the finance-growth nexus theory, which posits that financial development fosters economic growth through improved capital accumulation and resource allocation. The framework considers how banking sector health influences macroeconomic stability and growth.
The research employs a quantitative approach using secondary data from credible sources such as the World Bank. The econometric model assesses the impact of banking sector indicators on economic growth in Albania over the period 2012-2021.
Findings confirm that banking sector development significantly impacts economic growth in Albania. High levels of non-performing loans hinder growth, while enhanced credit to the private sector and robust bank capital ratios promote economic development. Policymakers should focus on reducing non-performing loans and strengthening the banking sector’s capital base to foster sustainable economic growth. Effective financial regulations and policies are crucial to ensuring a stable and efficient banking sector that can support long-term economic prosperity in Albania.
Keywords: Banking Sector; GDP; NPL; Albania; Economic Development
Volume 9, No.1 (2024): April
ISSN 2661-2666 (Online) International Scientific Journal Monte (ISJM)
ISSN 2661-264X (Print)
DOI URL: https://doi.org/10.33807/monte.20243127
Full Text: PDF
This is an open-access article under the CC BY-NC-ND license (creativecommons.org/licenses/by-nc-nd/4.0/)