From the Perspectives of Macroeconomic Factors: The Past and Future of Problematic Loans in Albania

Abstract

There are a lot of risks that influence the ongoing performance in banking system and especially commercial banks, but, the credit risk is one of the highest one. The most important factor that indicates this performance is the level of nonperforming loans. It highly affects the bank stability each year. So, for this reason it is very important to manage them in the most effective way possible. For being able to manage these loans we must understand and know what are the main factors that indicate them are. There are different factors, such as macroeconomic and banking factors. The purpose of this paper is to analyze these factors in order to maintain the bank stability in the right way. This analyze is done for the Albanian banking system during the years 2000-2012. Factors included are the GDP rate, Real Interest Rate, Inflation Rate, Money Supply Growth Rate, and Unemployment Rate. The relation between these factors and NPLs show us the ongoing growth of the NPLs and how are affected.