The Impact of Macroeconomic Variables on the Non Performing Loans in the Albanian Banking System During 2005 - 2012

Abstract

The aim of this paper is to analyze the impact of the main macroeconomic variables in the non performing loans’ level in the Albanian banking system. This study is motivated by the hypothesis that macroeconomic variables have an effect on the non performing loans’ level. The paper will be focused to find out the relations of the non performing loans ratio and the GDP, inflation rate, exchange rate euro/all and base interest rate by using a simple regression model. The Albanian banking system from 2008 is suffering from an ongoing growth level of the non performing loans and this is a big problem for the individual banks and for the banking system as a whole. Actually the level of non performing loans in the Albanian banking system is very concerning reaching up to 23.1% of the total loans. The Bank of Albania during the global financial crises has to be more vigilant of potential weaknesses of our banking system. This study is meant to be added to the actual field of research papers in the non performing loans issue.

DOI: 10.5901/ajis.2013.v2n9p335