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Determinants of bank credit to the private sector: The case of Albania

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  • Shijaku, Gerti
  • Kalluci, Irini

Abstract

This discussion paper focuses on identifying and evaluating the long run determinants of bank credit to the private sector in the case of Albania by employing a Vector Error Correction Mechanism (VECM) approach based on demand and supply indicators. Estimations show that an adjustment mechanism exists bringing bank credit back to equilibrium. The results imply that lending is positively linked to economic growth. Further, banking and financial intermediation, as well as financial liberalisation would stimulate higher lending demand. In addition, lower cost of lending, diminishing government domestic borrowing and a more qualitative bank credit would create further lending incentives. At the same time, the exchange rate is found to pick up some demand valuation and consumption smoothing effects.

Suggested Citation

  • Shijaku, Gerti & Kalluci, Irini, 2013. "Determinants of bank credit to the private sector: The case of Albania," MPRA Paper 79092, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:79092
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    References listed on IDEAS

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    Cited by:

    1. Didarul Islam, 2022. "Determinants of Domestic Bank Credit to Private sectors in Bangladesh: An Empirical Investigation," Journal of Economic Impact, Science Impact Publishers, vol. 4(2), pages 65-74.
    2. Abimbola Oluwaseyi ADEMOLA, 2023. "Determinants Of Deposit Money Banks’ Credit To Manufacturing Sector In Nigeria," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 8(1), pages 161-175.
    3. Almir ALIHODŽIĆ & İbrahim Halil EKŞİ, 2018. "Credit growth and non-performing loans: evidence from Turkey and some Balkan countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 9, pages 229-249, December.
    4. Shijaku, Gerti, 2016. "The role of money as an important pillar for monetary policy: the case of Albania," MPRA Paper 79088, University Library of Munich, Germany.
    5. Daitri Tiwary & Samit Paul, 2023. "Role of Bank Credit and External Commercial Borrowings in Working Capital Financing: Evidence from Indian Manufacturing Firms," JRFM, MDPI, vol. 16(11), pages 1-19, October.
    6. Garšvienė Lina & Balčiūnaitė Kristina & Matuzevičiūtė Kristina & Ruplienė Dovilė, 2022. "Assessment of Factors Determining the Level of Private Credit in European Union Countries," Management of Organizations: Systematic Research, Sciendo, vol. 87(1), pages 67-82, June.
    7. Emna Trabelsi, 2019. "Do independence and transparency matter for bank development? A new lookup on emerging and developing countries," Post-Print hal-02162780, HAL.
    8. Onder Ozgur & Erdal Tanas Karagol & Fatih Cemil Ozbugday, 2021. "Machine learning approach to drivers of bank lending: evidence from an emerging economy," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-29, December.
    9. Ali Shingjergji & Marsida Hyseni, 2015. "The Impact of Macroeconomic and Banking Factors on Credit Growth in the Albanian Banking System," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 1, ejes_v1_i.
    10. Qazim Tmava & Ajtene Avdullahi & Bese Sadikaj, 2018. "Loan portfolio and nonperforming loans in Western Balkan Countries," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 7(4), pages 10-20, October.
    11. Shijaku, Gerti, 2016. "Foreign currency lending in Albania," MPRA Paper 79087, University Library of Munich, Germany.
    12. Gerti Shijaku, 2015. "The Macroeconomic Pass-through Effects of Monetary Policy through Sign Restrictions Approach: In the Case of Albania," IHEID Working Papers 11-2015, Economics Section, The Graduate Institute of International Studies.
    13. Dorothy Nampewo & Grace Ainomugisha Tinyinondi & Duncan Roy Kawooya & George Wilson Ssonko, 2016. "Determinants of private sector credit in Uganda: the role of mobile money," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 2(1), pages 1-16, December.

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    More about this item

    Keywords

    Credit to the private sector; VECM approach;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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