Banks In Albania Research Articles

Customers’ Attitudes and Perceived Constraints to E-Banking Services: A Survey Study in Albania

The relevance of the study is determined by the need to identify the level of satisfaction of customers of banks in Albania and the perceived limitations that hinder the development of electronic services. The purpose of the work is the analysis of clients’ perception of electronic banking services, the problems of ensuring client satisfaction and the development of proposals for its improvement. The methodological approach hinges on several key components: studying statistical data concerning banking services, conducting two-way analyses to explore variable interactions, conducting surveys to gather user insights, utilizing graphical methods to visualize the results, and employing generalization techniques to summarize research outcomes. The analysis of the development of the banking system of Albania, which showed a significant expansion of electronic services for customers, a substantial increase in the share of electronic transfers in their total number during 2010-2022. A survey of bank customers showed that the availability and flexibility of e-banking services are the most important attributes of their quality; however, there is an impact of perceived limitations on the increase in the number of e-banking users and the need to improve customer service has been proven. Despite the ease and speed of transactions, lower costs and time savings, customers do not rate e-banking as a high-quality service and demonstrate insufficient knowledge about these services. There is a need to improve communication with clients and to reduce costs or provide basic electronic banking services for free. The results and conclusions have practical significance in the development of financial and credit policy by the Government of Albania in the projection of the use of electronic technologies, for bank managers in the planning and marketing of banking services.

An Empirical Analysis of the Impact of Financial Leverage on the Performance of Second-Level Banks in Albania

The financial scene in Albania, has seen some significant changes over time, shaped by different market situations and rules that put specific limits on financial choices. In today’s world, where globalization and competition are running high, making smart financial moves is crucial for a company’s success. Most studies on traditional finance have been mostly focused on analyzing how a company’s everyday performance is connected with the amount of debt. These studies try to investigate the complex relationship between financial leverage and the factors that make a company successful. Deferent researchers have been looking into the basic details of financial leverage, focusing on theories like the pecking order, which suggests that companies Fprefer using their own money rather than borrowing from outside. Despite having an assembly of theories, there’s no one answer for how a company should balance its money or which financial moves guarantee success. Every business is different, dealing with unique challenges in its way. Understanding how a company acquires its funding and where it originates plays a crucial role for businesses aiming to economize while trying to achieve substantial growth. This highlights how important it is to set up a money plan that looks out for the company’s interests. Interestingly, in a market where there’s no tax on money moves, the way a company sets up its money doesn’t seem to change how much it’s worth. Businesses have room to refine how much debt they carry, both in the short and long term, based on big investment decisions and the need for quick cash. The exact effect of leverage depends on several variables, such as the firm’s risk appetite, the state of the economy, and the dynamics of the industry. To summarize, the main goal of this empirical investigation is to clarify the relationship between financial leverage and the performance curve of Albania’s second-level banks throughout the ten years from 2012 to 2022. This investigation seeks to clarify if financial leverage methods were modified by Albanian banks, especially second-level banks, in response to changing market dynamics and regulatory changes, and how these modifications affected the banks’ overall performance.

The Impact of Non-Performing Loans Ratio on Banking Profitability in the Albanian Banking System

Most of the studies have determined credit risk as the biggest risk among all other risks with a direct impact on the financial performance of a bank. The main objective of any bank, like any business unit, is to maximize shareholder value, so we considered it important to treat the impact of one of the most important bank’s risks on its profitability. Bank profitability and the non - performing loans ratio (NPLR) are the two main concepts in our study. This study aims to investigate the relationship and the stability over time of this relationship between the non - performing loans as the main indicator of credit risk management and profitability of commercial banks in Albania. The linear regression model is used to test the hypothesis raised in the study which tests the relationship that exists between the credit risk management indicator and bank profitability indicators. NPLR is taken as a representative indicator of credit risk management and ROE (return on equity) and ROA (return on assets) are taken as representative indicators of bank profitability. The statistical analysis in the study showed a negative impact of the NPLR indicator on the two indicators of bank profitability in our country. The findings of our study constitute a valuable contribution to banks and policy makers because a strong banking system motivates the financial stability of a country and increases the elasticity of economies to face economic crises. To conduct the study, we faced difficulties and challenges in finding a long time series of data for all the indicators taken in the study for each of the commercial banks operating in Albania. Although we were not able to provide the data for each commercial bank, we overcame this difficulty by taking the total data from the official website of the Bank of Albania. Taking into consideration that the banking history in Albania is relatively short we managed to find data for an 8-year study period which we used in our study.

An assessment of bank profitability: Evidence from Albania

Although the financial sector in Albania follows a fluctuating trend, the average return on assets has significantly improved during the last few years. To boost profitability and ensure long-term survival in this area, banks must concentrate on the factors that affect profitability. Various types of research offer conflicting results on the impact that macroeconomic factors have on bank profitability. Hence, the purpose of this paper is to provide a comprehensive perspective on the theoretical and empirical research of bank profitability in the Albanian banking system, including its components and the variables influencing the choice of how to effectively achieve profitability. More specifically, this study determines how macroeconomics impacts the profitability of Commercial Banks, mainly focusing on the effect of GDP growth, inflation, and real interest rate on the financial performance of second-level banks in Albania between 2011 and 2020. To achieve this goal, a multiple regression is performed on a panel dataset, and the empirical findings reveal that the independent variables, including GDP growth, inflation, and real interest rate are significant factors determining Albanian bank profitability for the period considered. The study's conclusions will be useful for various parties, including management bodies, researchers, policymakers, and the government.

Impact of interest rate, exchange rate, and inflation on commercial banks’ performance

This study aims to measure the impact of interest rates, exchange rates, and inflation on the performance of commercial banks in Albania, using monthly data from December 2015 to May 2022 obtained from the Bank of Albania and the Institute of Statistics of Albania (INSTAT). The multiple regression model measures the relationship between the dependent variable (ROA) and independent variables (inflation, interest rate, and exchange rate). The estimation results reveal that the interest rate variability has a high impact on the financial factor ROA. In contrast, the variability of the exchange rate harms it. The effect of variable nominal effective exchange rate (NEER) on ROA is low, and inflation negatively influences it. The model has resulted within all the criteria related to the regression analysis but with a low importance level. The important conclusion of this study is that the combination of variables, inflation, exchange rate, and interest rate, does not measure the impact of inflation on the performance of commercial banks. Other micro and macroeconomic factors can measure this impact.

Impact of Legal Incentives on “Credit Fraud” Criminal Offence

Currently, the number of financial institutions has been increased in Albania, which provides Albanian citizens with access to various financial services, mainly to obtain financing services in the form of microcredit. Given the history of our people, not all the Albanian citizens have had opportunity to have access and to benefit from various financial services. Denial of financial services is an issue that has affected not only Albania, but also other small Balkan countries. The reasons for this denial are numerous, but among them, we can distinguish the lack of lending experience, as one of the common reasons for being excluded in these countries from the development of the financial sector. Taking into consideration that, the growth of financial institutions led to the growth of financial services by raising awareness and financial education of citizens. Finally, the Bank of Albania , as the supervisor of financial activities, intends to set a ceiling on the interest of consumer loans provided by non-bank financial institutions and commercial banks in Albania. This paper aims to present through a professional legal treatment all the challenges of the legal and institutional framework of the Bank of Albania, itself in undertaking this initiative. The questions we intend to answer through this paper are: Is the Bank of Albania legitimized to set a ceiling interest rate for consumer credit? What are the benefits or challenges that this initiative will bring to the financial sector? How will this regulation affect the criminal offense of "Credit Fraud"? How will the financial industry be designed after the implementation of the initiative? Will it have any impact on customer beneficial? etc.

Barriers to the career progression of women in banking sector in Albania. Do perceptions differ?

International statistics and studies emphasise the gender imbalance in high managerial levels. According to the literature review the undereppresentation of women in high levels is related to the “Glass Ceiling” phenomenon. These are barriers that hinder the career progression of women. According to the Gender Organization Structure model, these barriers are divided into three categories: Individual, Social and Organizational. The purpose of this study is to find out how do perceptions about these barriers vary according to five demographic variables (age, marital status, education, managerial position and experience) of women at managerial levels in commercial banks in Albania. The Kruskal-Wallis test is used to test the differences in perception of barriers. The results of the study show that: women’s perceptions about individual barriers vary according only to the managerial level; women’s perceptions about social barriers vary only according to age and maritual status; women’s perceptions about organizational barriers vary only to marital status.

The Need for Improvement of External Audit Reports of Banks (The Case of Banks in Albania Which Mainly Belong to EU Banks)

The financial crisis of 2008 highlighted weaknesses in risk management, control and governance of banks, auditing, and financial supervision. This led to increased consideration of the respective roles and interactions of banking supervisors with external and internal auditors, who are key contributors to market discipline. Auditors ensure that financial information is transparent and reliable while supervisors provide confidence in financial systems. On the other hand, auditors enable market players to make decisions based on this information and contribute to financial stability. In 2014, the Basel Committee on Banking Supervision considered the interaction between supervisors and external auditors by enabling their relationships to improve the quality of banks' audits, financial statements, and effective supervision of the banking system. Since 2015, the Bank of Albania has adopted its regulatory framework almost fully compliant with these principles. This paper analyses the typology of issues identified in the external audit reports of the 10 largest banks in Albania for 2018 and needs for their improvement.

Marketing communication and banking service industry

The purpose of the study is to identify the link between the Integrated Marketing Communication and service quality in the banking industry in Albania. The focus of the study is the impact that the promotion mix chosen by commercial banks in Albania has to the perceived service quality by customers. Commercial banks in Albania are facing to a growing competition and an environment that is constantly changing. Consumers and their growing needs, dynamic environment, force organizations operating in the banking industry in Albania to apply marketing practices that affect the customer perceived quality of services offered. The promotion mix is one of the elements which is increasingly applied by commercial banks in Albania in order to influence consumers and achieve their objectives. The impact of the promotional mix in the customer perceived quality is the focus of study. To achieve the objective of the study, as an instrument for collecting primary data are used 200 questionnaires with data from customers of commercial banks received in the study. These data integrated with existing literature and studies served as a basis for study. In this study is evidenced a close relationship between the elements of the promotional mix applied by commercial banks in Albania and the service quality perceived by customers. Integrated Marketing Communication applied by commercial banks in Albania has a positive impact on the service quality perceived by customers. Keywords: Banking services, promotion, service quality DOI: 10.7176/JMCR/67-09 Publication date: April 30 th 2020

Commercial Bank Performance and Credit Risk in Albania

Abstract The banking sector is a complex system composed of a large number of stakeholders that interacts in a non-simple way continuously and which plays the key role in economic development of each country. The economies of developing countries like Albania are characterized by high demand for credit due to increasing investment. The revenues are even higher when the risk is greater. Of the high related risk, crediting leads to high returns. Credit risk is one of the most important types of risk in the banking sector that affect the bank performance, as it exhibits loss probability because of the failure of debtor to fulfill its obligations to bank. In June 2016, the level of non-performing loans in Albania appears in 24.4% of total loans, representing the major obstacle to the development and performance of the banking sector in Albania. The purpose of the estimable model outlined in this section is to capture the effects of macroeconomic, bank specific factors and Herfindahl-Hirschmann index (HHI) in the industry of bank performance. We also include a range of bank-specific variables that have been used in previous empirical studies that examine drivers of bank performance. A recent decline in revenue was observed due to higher provisioning expenses, which reduce banks’ profits. To identify factors affecting bank profitability, we have got to study those factors like bank-specific (internal) factors, industry specific and macroeconomic (external) factors. The internal factors that influence profitability are expressed in terms of efficiency, productivity, competition, concentration, soundness, safety and profitability. Industry specific factor is market concentration, while macroeconomic factors are Gross Domestic Product (GDP), Inflation Rate, and Real effective exchange rate (REER). In this paper, we will test whether lending decisions of all banks operating in Albania exhibit moral hazard. The study carried out an empirical investigation of the quantitative effect of credit risk on the performance of 16 commercial banks in Albania organized quarterly over the period of 14 years (2002-2015).

Asymmetric Information versus Banks’ Costumer Trust, Albania Case Linked With SEE Countries

This article examines the impact of information asymmetry on the level of trust customers have towards their banks in Albania. Specifically, the article analyses the implementation of transparency and information symmetry related to pricing and publishing banking interest rates, commissions and fees, clarity of banking products, and reports. The minimal obligation of Albanian banks is to obey the legal and regulatory requirements regarding transparency and information symmetry. However, banks in Albania - for pricing, commissions and fees of their typical services - follow their competition which is a relatively low level of transparency. Comparison of products’ terms and conditions among banks is difficult for the public as a result of the information asymmetry. In addition, some banks are in breach of regulation on transparency for banking and financial products and services. As importantly, expensive bank money transfer commissions increase customer tendency to avoid paying through the banking system, which in turn increase informality and potential forms of tax evasion. These findings are compared with data on other banks in South East Europe to identify the mechanism(s) that affect costumer trust. The article presents several conclusions and implications for Central Banks in Albania and the region to prevent potential costumer distrust by requiring banks to establish a common methodology for pricing and publication of symmetric information for products’ terms and conditions, which will be a good practice for the banking markets in Albania and the region.

Impact of credit risk and exchange rate risk on the performance of commercial banks in Albania during the period 2005-2015

Impact of credit risk and exchange rate risk on the performance of commercial banks in Albania during the period 2005-2015

The Relationship between Risk Management and Profitability of Commercial Banks in Albania

Profitability is an indicator of the capacity of commercial banks to cope with their risk and/or capital growth, showing their competitiveness and measuring the quality of management. Credit risk is one of the significant risks of commercial banks by the nature of their activities. By effectively managing the exposure of commercial banks to credit risk, they not only support the viability and profitability of their business but also contribute to the system, stability and efficient allocation of capital to the economy. The purpose of the study was to determine whether there is a relationship between credit risk management and profitability in commercial banks in Albania. In this paper, there are four variables: ROA and ROE are the dependent variables, whereas non-performing loans (NPLs) and capital adequacy (CAR) are the independent variables. The main source of data collection are the annual reports for a 7-year period (2008-2015) by the Albanian Association of Banks. For quantitative data analysis, multiple regression model was used (SPSS).

Valuation of Factors that Affect Employment in the Albania Banking System: An Analysis Based on Design of Experiment (DOE) Method

Design of Experiments (DOE) is a statistical method well known in assessing the quality of products and services. The particularity in this work consist in the use and design of DOE to assess factors that affect employment in the banking system in Albania. Typically, this paper aims to design DOE in the view of analyzing different factors that affects employment, particularly young people, in the banking system. In this regard, a survey was conducted with heads of key departments at various banks in Albania, heads of human resource departments included, trying to evaluate different factors that are considered more important in the employment process. Furthermore, an orthogonal matrix is created for proper data processing, by using a standard matrix of Taguchi L28. The analysis has estimated the impact and weight of factors taken in study, which resulted more significant in employment of young graduated people into the banking system in Albania. The paper aims to improve orientation in high education studies, particularly in economic and financial faculties, in view of labor market.

Determinants of profitability according to groups of banks in Albania

The paper analyzed the determinants of profitability of all the commercial banks in Albania, where the banks were analyzed by dividing into groups[1]. These determinants are categorized into two groups, internal and external factors. The objective of the study is to determine the factors that affect the profitability in commercial banks, to show how they differ according to groups of the banks and making some recommendations which can help the management. A panel data with all the commercial banks that operate in Albania is analyzed for the period 2009-2014. To measure the profitability is used the independent variable return on assets. Banking specific factors that are used in this study include variables such as bank size, asset management, credit risk, liquidity of assets, capital adequacy, operational efficiency and cost of financing. On the other hand is taken into consideration only one industry specific factor, which is the concentration and some macroeconomic factors as GDP, exchange rate and inflation. The quantitative data are obtained from the financial statements of commercial banks, INSTAT, Bank of Albania, World Bank and Bankscope, in order to make empirical analysis needed to identify and measure the determinants of bank profitability. In particular, the multiple regression analysis is used to measure the impact of determinants in bank profitability and to realize empirical analysis is used Eviews 7.The results of the study showed a positive relationship between bank size and profitability, statistically important in the group 2, with 1% level of significance. The credit risk had an inverse relation with profitability in the model, statistically significant at 1% level of significance for the group 2 and 5% for the group 1 and 3. While, in terms of macroeconomic factors, GDP had a positive relationship with profitability and it is statistically significant in the group 3. On the other hand, inflation and exchange rate showed a positive relation with profitability (ROA/ROE) but statistically insignificant for the model.[1] According to the Bank of Albania, in December 2014, banks in the Albanian sector are divided by size of activity: 1) The bank group 1 (0-2% of total banking sector assets) include United Bank of Albania, Veneto Bank, International Commercial Bank, First Investment Bank, Credit Bank of Albania; 2) The bank group 2 (2-7% of total banking sector assets) include Procredit Bank, Credit Agricole Bank, National Bank of Greece, Societe Generale Bank - Albania, Alpha Bank - Albania, Union Bank; and 3) The banks group 3 (about 7% of total banking sector assets) include Raiffeisen Bank, Credins Bank, National Commercial Bank, Intesa Sanpaolo Bank-Albania, Tirana Bank.

The impact of liquidity risk management on the performance of Albanian Commercial Banks during the period 2005-2015

This study is focused on liquidity risk analysis in order to identify if this risk affects the profitability of Commercial Banks operating in Albania. The paper includes the identification, the analysis and the management of this type of risk. Through numerical analysis it will be studied the quantitative effect of liquidity risk on the profitability of commercial banks in Albania during the period 2005-2015. Following the study, liquidity risk is expected to have a considerable effect on the profitability of Commercial Banks operating in Albania. The analysis is based on an empirical study with secondary qualitative and quantitative data. This study provides a contribution within the identification of liquidity risk factors that affect more the profitability of the Albania Banks and the finding of a scientific solution in order to manage this risk in a more efficient way. The recommendations derived from this study will serve to young researchers of academic area and professional field. Also, this paper will create new discussions on risk management instruments used in the Albanian banking system. Keywords : Profitability, Liquidity risk, Commercial banks, Albania

DETERMINANTS OF EFFICIENCY IN ALBANIAN BANKING INDUSTRY; AN EMPIRICAL DIAGNOSIS

Many articles discuss the importance of banking systems and their profitability as well as the factors determining these. This article examines the determinants of bank efficiency in the Albanian banking industry. During the second half of this decade a considerable decrease in the efficiency ratio of the Albanian banking system was evident. To understand which factors affected the efficiency, and whether Albania should control certain factors in order to improve efficiency, relationships between particular factors were analyzed using a multiple regression analysis. The study examines 16 commercial banks in Albania, from 1998 to 2015. It finds a significant relationship between efficiency, capital adequacy, the return on assets, and solvency

Customer-Bank Relationship in Commercial Banks Operating in Albania

Financial institutions with high performance are always looking to the needs and requirements of their clients, in order to survive and compete successfully in today's dynamic environment of corporations. For this reason researchers have stressed repeatedly the importance of customer satisfaction, loyalty and customer-bank relationship. The aim of this study is to develop a better theoretical and practical understanding of the impact that quality of service has in customer-bank relationship. This study examines the perception of service quality by clients of commercial banks operating in Albania and the effect that this quality has in customer-bank relationship. Measuring the perception of service quality is based on SERVQUAL model proposed by Parasuraman, Zeithaml - Berry (1988), while the measurement of customer-bank relationship is made according to the model proposed by Ward - Dagger (2007). Results of this analysis indicate that the quality of service is an important prerequisite of customer-bank relationship. From this study it is clear that managers and decision-makers in commercial banks in Albania seek to improve the quality of service elements, which constitute the most significant contribution to the improvement and strengthening of the relationship.

Lack of Credit in Albania; Who is to “Blame” Analyzing the Demand

The last global crisis had it influence on Albanian economy as well. As the economy is still struggling to recover from the slowdown, a special attention is dedicated to lending which will in turn help investments pick up. Banks in Albania are currently flooding in excess deposits, but meanwhile the lending has hit its lowest score. What is refraining banks from lending? Is it really them to blame or maybe the demand is also part of the problem? Are businesses suffering from lack of funds to finance their activity or are they hesitating to invest and are waiting for better times to come along? The purpose of this study is to look into these questions and find the reasons behind them. This paper is focused on the demand side, analyzing some of the most important indicators influencing the demand for credit like enterprises growth, profits, planned investments, working capital needs, liquidity, etc. In order to get better understanding on the behavior of these variables the enterprises are divided in four groups by size criteria. The analysis is covering data for five-year timeframe, which is corresponding with the start of the economic slowdown. To help getting a prospect of the present and the future perceptions of the economic situation, a survey was conducted on a small sample of enterprises. This study comes to the conclusion that the demand for credit is growing, but what’s keeping businesses from applying for it, is mainly because of high interest rates and cost of credit, the study ends with some recommendations toward the solution.

The Impact of Macro-Economic Factors on Non-Performing Loans in Albania

Albania's banking system has made great progress, especially in recent decades. In the last five years the economy has had many important changes, with regard to financial sustainability in Albania. Our country is going through a difficult moment and the Albanian banking system is characterized by high levels of non-performing loans. Our banking system has several problems and the authorities are not giving the proper solution and the implementation of these solutions is taking too much time, thing that aggravates even further the current situation. Our hypothesis in this paper is: despite the totality of all the macroeconomic factors that influence in a country, the main factor that had a negative impact on the high level of nonperforming loans in Albania is the gross domestic product. To prove this hypothesis, we used two methods, the first one is the linear regression and the other one is stress tests. Besides that, we have referred to the most recent literature and see also the experience of other countries. The same methods were also used by other authors both foreign and Albanian such as (2004), Vlieghe (2001) Shijaku & Czech (2010) etc. Meanwhile, we have also analyzed the internal factors which had an impact on the portfolio of non-performing loans in commercial banks in Albania, highlighting the impact of the professional analysts of credit, the implementation of procedures and manuals from banks, corruption, the rapid growth of the non-performing loans during 2007-08 etc. DOI: 10.5901/ajis.2015.v4n3s1p534