Foreign capital and credit expansion in Albanian banking system

Abstract

This article aims to examine the role of foreign banks in credit expansion in Albania. The financial system in Albania is a bank based financial system. The role of bank credit in the Albanian economy has been significantly increased especially after 2000, when large capital inflows entered in the banking system. The entrance of foreign banks has been influenced by several factors such as profit orientation, privatization process, trade relationships etc. The rapid development of banking system was associated with credit expansion. Therefore the credit growth has been very fast. Has the bank credit expansion been a normal consequence of the fast financial development in Albania? Based on the literature, this article will answer to this question examining the credit growth rates in Albania, after 2000. The data used in this article will be of secondary type, based on the official statistics published by respective institutions.