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The impact of lending on economic growth, the case of Albania

Author

Listed:
  • Glediana ZENELI (FOTO)

    (De pa rtment of Applie dSta tis tical a nd I nforma tics, Economy Faculty, Unive rs ity of Tirana, Unive rs ity of Tira na , 1001 Tira na . Alba nia .)

  • Denisa KACORRI (SALILLARI)

    (Department of Mathematical Engineering, Faculty of Mathematical Engineering and Physics Engineering, Polytechnic University of Tirana , Mother Teresa Square Nr. 4, 1001 Tirana , Albania)

Abstract

Lending is an important element for the economy of a country. Credit leads to an increase in spending, thus increasing revenue levels in the economy. This revenue growth brings a higher GDP (gross domestic product) and thus increases productivity. This paper aims to analyze whether there is a correlation between private sector credit and economic growth for the period 1996-2021 in the case of Albania using econometric models. We have to say that credit is one of the important elements of the financial system. Financial development over the years has brought a variety of products offered by the banking sector. But we must remember that lending, which is one of the main elements of this system, was one of the factors that caused the global crisis in 2008-2011. Hence, this study aims to discern whether lending has positively impacted the Albanian economy or not, considering its potential negative effects. It is a widely held belief that the absence of credit prevents a country's economic development, and this paper seeks to determine the accuracy of this claim. Due to the negative impact of credits on the economy in this paper we intend to survey how the loan has really affected the Albanian economy.

Suggested Citation

  • Glediana ZENELI (FOTO) & Denisa KACORRI (SALILLARI), 2023. "The impact of lending on economic growth, the case of Albania," Journal of Economics and Political Economy, EconSciences Journals, vol. 10(3-4), pages 95-103, September.
    • Handle: RePEc:cvv:journ1:v:10:y:2023:i:3-4:p:95-103
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    References listed on IDEAS

    as
    1. Greenwood, Jeremy & Jovanovic, Boyan, 1990. "Financial Development, Growth, and the Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1076-1107, October.
    2. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
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    Keywords

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    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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