Financial Sector Assessment Update : Albania

Although the Albanian financial system withstood the shocks of 2008 global crisis relatively well, it continues to operate in highly uncertain macroeconomic environment, which triggers increased vulnerabilities in the system. The decline in profitability, growing non-performing loans (NPLs), substantial level of euroization, continued deleveraging of foreign bank subsidiaries and significant investments in government bonds in the absence of active secondary market are the main challenges that banking system faces. Given strong trade and financial links with euro area, the financial system and real sector in general are increasingly vulnerable to external shocks as well. Since 2007 the Bank of Albania (BoA) has introduced several macro-prudential measures to safeguard financial stability in the country. Higher risk weights and stricter loan-to-value and debt-to-income ratios were placed on banks surpassing twin limits on the rate of credit growth and NPL levels. A second set of macro-prudential policies was put in place in late 2011 to limit contagion risks and international spillovers: (i) foreign bank branches were converted into subsidiaries; (ii) liquidity regulations were tightened; and (iii) the regulation on related-party exposure was enhanced. In addition to that, the risk weights for unhedged borrowers were increased to 150 percent and a limit of such loans was set to 400 percent of capital. Overall, financial reporting legislation in Albania has improved recently and has a high degree of alignment with the acquis communautaire of the European Union (EU).

Bibliographic Details

Main Authors:	World Bank, International Monetary Fund
Language:	English en_US
Published:	World Bank, Washington, DC 2014-02
Subjects:	ACCOUNTING, ARREARS, ASSET QUALITY, ASSET RATIO, ASSET VALUE, AUCTION, AUCTIONS, AUDIT COMMITTEES, AUDIT STANDARDS, BAILIFF, BAILIFFS, BALANCE SHEET, BALANCE SHEETS, BANK ASSETS, BANK BRANCHES, BANK CREDIT, BANK DEPOSITS, BANK HOLDINGS, BANK MARKET, BANK PROFITABILITY, BANK SUPERVISION, BANKING LAW, BANKING SECTOR, BANKING SECTOR ASSETS, BANKING SYSTEM, BID, BIDS, BOND ISSUING, CAPITAL ADEQUACY, CAPITAL MARKETS, CAPITAL REQUIREMENTS, CAPITALIZATION, CASH MANAGEMENT, CENTRAL BANK, CENTRAL SECURITIES DEPOSITORY, CIVIL CODE, COLLATERAL, COLLATERAL POLICY, COLLECTIVE INVESTMENT, COMMERCIAL BANKS, COMPENSATION FUND, CONTINGENCY PLANNING, CORPORATE GOVERNANCE, CREDIT ASSOCIATIONS, CREDIT COOPERATIVES, CREDIT GROWTH, CREDIT LOSSES, CREDIT POLICIES, CREDIT RISK, CREDITORS, CURRENT ACCOUNT DEFICIT, DEBT ISSUANCE, DEBT ISSUANCES, DEBT MARKET DEVELOPMENT, DEBT RESTRUCTURING, DEBT SECURITIES, DEPOSIT, DEPOSIT INSURANCE, DEPOSITORS, DOMESTIC BANKING, DOMESTIC DEBT, DOMESTIC DEBT MARKET, DOMESTIC MARKET, DURABLE, DURABLE GOODS, ENFORCEMENT POWERS, EQUIPMENT, EQUITY RETURN, EUROBOND, EXCHANGE RATE, EXPENDITURE, EXTERNAL BORROWING, EXTERNAL DEBT, FINANCIAL ASSETS, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL RISKS, FINANCIAL STABILITY, FINANCIAL STATEMENTS, FINANCIAL STRESS, FINANCIAL SYSTEM, FISCAL DEFICITS, FOREIGN BANK, FOREIGN BANKS, FOREIGN CURRENCY, FOREIGN CURRENCY LOANS, FOREIGN CURRENCY RISKS, FOREIGN EXCHANGE, FOREIGN EXCHANGE MARKET, FOREIGN EXCHANGE MARKETS, FRAMEWORK FOR REPO TRANSACTIONS, GOVERNMENT BONDS, GOVERNMENT DEBT, GOVERNMENT DEBT MARKETS, GOVERNMENT SECURITIES MARKETS, GRANT FUNDING, HOLDING, HOLDINGS, HOLDINGS OF GOVERNMENT SECURITIES, INFLATION, INSOLVENCY REGIME, INSTITUTIONAL CAPACITY, INSTRUMENT, INSURANCE, INSURANCE COMPANIES, INSURANCE MARKET, INSURANCE MARKETS, INSURANCE PREMIUM, INSURANCE PRODUCTS, INTEREST RATE, INTEREST RATE RISK, INTEREST RATES, INTERNAL AUDIT, INTERNATIONAL FINANCE, INTERNATIONAL STANDARDS, INVESTMENT BANK, INVESTMENT FUND, INVESTMENT FUNDS, INVESTMENT OPPORTUNITIES, INVESTMENT STRATEGIES, INVESTOR BASE, ISSUANCE, LABOR MARKET, LABOR MARKETS, LEGAL FRAMEWORK, LEGAL PROTECTION, LENDER, LENDER OF LAST RESORT, LEVEL PLAYING FIELD, LIABILITY, LIQUID ASSETS, LIQUIDATION, LIQUIDITY, LIQUIDITY MANAGEMENT, LIQUIDITY POSITION, LIQUIDITY RISK, LIQUIDITY RISKS, LOAN, LOAN PORTFOLIO, LOAN PORTFOLIO AS COLLATERAL, LOAN PORTFOLIOS, LOCAL MARKET, MACROECONOMIC ENVIRONMENT, MARKET ACCESS, MARKET BORROWING, MARKET FOR GOVERNMENT SECURITIES, MARKET PARTICIPANTS, MARKET RISKS, MARKET VALUE, MATURITIES, MATURITY, MATURITY MISMATCHES, MONETARY POLICY, MONEY MARKET, NATIONAL BANK, NON PERFORMING LOANS, NON-PERFORMING LOANS, NONPERFORMING LOANS, NPL, OPERATIONAL INDEPENDENCE, OUTSTANDING LOANS, PENSION, PENSION FUNDS, PENSION REFORM, PENSION SYSTEM, PENSIONS, POST OFFICES, PRICE DISCOVERY, PRIMARY MARKET, PROVISIONING RULES, PRUDENTIAL REGULATION, PRUDENTIAL STANDARDS, PUBLIC DEBT, PUBLIC DEBT HOLDING, PUBLIC DEBT MANAGEMENT, REAL ESTATE LOANS, REGULATORY AUTHORITY, REGULATORY FRAMEWORK, REPAYMENT, REPO, REPO MARKET, RESERVES, RETAIL INVESTORS, RETURN, RETURN ON ASSETS, RETURNS, RISK EXPOSURE, RISK FACTORS, RISK MANAGEMENT, SAFETY NET, SECONDARY MARKET, SECONDARY MARKET ACTIVITY, SECONDARY MARKET PARTICIPATION, SECURITIES, SECURITIES TRANSACTIONS, SETTLEMENT, SETTLEMENT RISKS, SHAREHOLDERS, SHORT-TERM DEBT, SOLVENCY, SOVEREIGN DEBT, SOVEREIGN RISKS, STOCK EXCHANGE, SUPERVISORY AGENCIES, SUPERVISORY AUTHORITY, T-BILLS, TAX, TAX CODE, TAX POLICY, TAX TREATMENT, TERRORISM, TRANSACTION, TRANSPARENCY, TREASURY, TREASURY BILLS, TREASURY BONDS, UNDERLYING ASSETS, VALUATION, VALUATIONS, WITHDRAWAL, WORKING CAPITAL, YIELD CURVE,
Online Access:	http://documents.worldbank.org/curated/en/2014/02/19295947/albania-financial-sector-assessment-update https://hdl.handle.net/10986/17769
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