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Do Lending Standards Matter for Non-Financial Corporate Credit? Evidence from Albania

Author

Listed:
  • Meri Papavangjeli

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic & Joint Vienna Institute)

  • Lorena Skufi

    (Bank of Albania & Metropolitan University of Tirana)

  • Adam Gersl

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)

Abstract

This study investigates the relationship between lending standards and credit dynamics in Albania. Using a unique bank-level dataset from the Bank Lending Standards Survey, we differentiate between newly issued domestic-currency and foreign-currency loans to non-financial corporations. We construct a quantitative index of lending standards using detailed bank-level and macro-financial data. The analysis reveals that tightening internal credit criteria, driven by macroeconomic uncertainty, regulatory constraints, or risk aversion, significantly reduces new business lending, weakening bank–firm relationships. In addition, we assess the role of monetary and macroprudential policies, finding that policy changes affect domestic-currency and foreign-currency credit differently, amplifying the impact of supply-side tightening. Firms face limited ability to offset these constraints through alternative lenders, reflecting low substitutability in the Albanian credit market. The effects of tightening are persistent and intensify during economic stress, yielding important implications for monetary transmission, macroprudential policy effectiveness, financial stability, and crisis resilience in small, bank-based economies.

Suggested Citation

  • Meri Papavangjeli & Lorena Skufi & Adam Gersl, 2026. "Do Lending Standards Matter for Non-Financial Corporate Credit? Evidence from Albania," Working Papers IES 2026/04, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised May 2026.
    • Handle: RePEc:fau:wpaper:wp2026_04
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    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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