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Does Banking Concentration Affect Non-Performing Loans in Albania?

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  • Arjan Tushaj
  • Valentina Sinaj

Abstract

Purpose: The article examines the correlation among banking concentration and non – performing loans using datasets of Albanian banking sector during 2005 - 2017. We investigated the non – performing loans affected by market structural variables, banking variables and macroeconomic variables. Approach/Methodology/Design: Test of loan concentration impact on non – performing loans through linear models provided the significant results. Findings: Albanian banking sector proved the ambiguous results and the sound correlation in long run among concentration and non – performing loans. Outcome confirmed the negative effect of return on assets and average loan interest rate on non- performing. Meanwhile the total loans, exchange rates and Gross Domestic Production affected positively the non-performing loans. Practical Implications: Albanian banking sector operated to moderate concentration despite of bank’s mergers recently. It has linked to the increasing non – performing loans ratio past the last quarter of 2008.We demonstrated the empirical impacts that they ought to take into consideration by banking sector. Originality/Value: The research provides empirical results encouraging further investigations on banking sector.

Suggested Citation

  • Arjan Tushaj & Valentina Sinaj, 2020. "Does Banking Concentration Affect Non-Performing Loans in Albania?," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 1074-1083.
    • Handle: RePEc:ers:journl:v:xxiii:y:2020:i:special1:p:1074-1083
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    References listed on IDEAS

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    More about this item

    Keywords

    Non – performing loans; concentration ratio; optimum concentration.;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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