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The Causal Relationship Between Bank Credit For Real Estate And Economic Growth In Albania

Author

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  • KLEJDA GABESHI

    (DOCTORAL SCHOOL OF ECONOMIC SCIENCES, UNIVERSITY OF CRAIOVA, ROMANIA / LOGOS UNIVERSITY, TIRANA, ALBANIA)

Abstract

Construction has become one of the main sectors supporting economic growth in Albania in recent years. Some of the factors that have boosted the growth are: the increase of residential projects, the continuation of postearthquake reconstruction works and public investments, mainly in road construction. A VEC model will be presented in this paper that uses bank credit for real estate as a cointegrated variable with GDP growth, as the construction sector in Albania occupies a very important role in the economy. The objective of this model is to identify the shortterm and long-term causal relationship between this credit activity and economic growth in Albania. The analysis by subject and purpose of credit use shows that real estate investment credit for individuals occupies the largest share of the total credit portfolio, followed by real estate credit granted to businesses. From the results of the econometric model it was concluded that credit to the real estate sector has a positive effect on long-term economic growth. The construction sector is one of the sectors that contribute the most to GDP and, at the same time, to the growth of the banks' loan portfolio. Lending to this sector, according to the results of this model, has a positive influence on the economy.

Suggested Citation

  • Klejda Gabeshi, 2023. "The Causal Relationship Between Bank Credit For Real Estate And Economic Growth In Albania," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 188-193, February.
    • Handle: RePEc:cbu:jrnlec:y:2023:v:1:p:188-193
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    References listed on IDEAS

    as
    1. Klejda Gabeshi, 2022. "The Impact of Bank Credit to the Public and Private Sector on the Economic Growth in Albania," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 882-888, September.
    2. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084, Central Bank of Chile.
    3. Klejda Gabeshi, 2022. "The Impact Of Credit Activity On The Economic Evolution Of The Developed Economies," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 185-190, February.
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