The Impact of Macroeconomic and Banking Factors on Credit Growth in the Albanian Banking System

Abstract

The aim of this paper is to analyze the influence of some macroeconomic and bankhttp://ejes.euser.org/issues/may-august-2015/Ali.pdfing factors on credit growth in the Albanian banking system. From the literature review is noticed that the credit growth in the banking system is influenced by both macroeconomic and banking factors. We use credit growth as a dependent variable while as independent variables we use: GDP growth, inflation rate, unemployment rate, loan interest rate, capital adequacy ratio, bank size and NPL ratio. The relationship between credit growth and macroeconomic and banking factors was tested by using a regression model like the ordinary least squares (OLS). We take into consideration a period from 2002 – 2013 using quarterly panel data for the whole Albanian banking system with a total of 48 observations per each variable. The regression results find out that the credit growth in the Albanian banking system is positively related to GDP growth, inflation rate and capital adequacy ratio while is negatively related to unemployment rate, interest rate, non performing loans and bank size.