IMPACT OF OPERATIONAL RISK EFFICIENCY ON BAD LOANS
Journal Title: Metropolitan Tirana Journal of Business and Economics - Year 2018, Vol 2, Issue 1
Abstract
As part of our economic system, lending from the banking sector to the economy is one of the main channels for monetary policy being implemented in our economic system. In this paper, we will make a detailed analysis through empirical evidence that Economic Development in Albania remains isolated as a result of debt and bad credit or sub-standard ones. In this perspective we will see what will be the effects of bad debt in unemployment, interest rates, GDP, remittances. We will examine and explain how the volatility of these factors affect the loans below standard. In the first section of our paper we will give an initial macroeconomic framework of Albania, taking into account the most important indicators such as gross domestic product, exchange rate, monetary aggregate M2, inflation, unemployment, etc. In the second section, we have a detailed theoretical explanation of credit risk and lending standards based on current rules of the banking system, highlighting the most significant causes of these problems. The last and most significant section of the paper is based on the establishment of an econometric model based on a multiple regression with minimal squares method to emphasize more clearly the role of bank lending in economic development. Through these models we will try to explain what the economic variables that aid bad debt are, and our hypothesis is to explain how bad debt is the main contributor to Albania’s low economic growth in the recent years. The paper ends with recommendations addressed to relevant institutions targeting the revitalization of the financial sector and lending to our economy as a crucial factor for economic growth.
Authors and Affiliations
Eralda Noçka, Ina Pagria
Keywords
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- EP ID EP478784
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