The Impact of Bank Credit to the Public and Private Sector on the Economic Growth in Albania

Klejda Gabeshi ()
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Klejda Gabeshi: University of Craiova, Faculty of Economics and Business Administration, Romania Logos University of Tirana, Albania

Ovidius University Annals, Economic Sciences Series, 2022, vol. XXII, issue 1, 882-888

Abstract: The Vector Error Correction Model uses bank credit to the public sector and bank credit to the private sector as variables co-integrated with GDP growth. Finding the short-term and long-term causes of the relationship between credit activity and economic growth in Albania is the primary goal of this paper. The independent variable of bank credit to the public sector expressed as a percentage of GDP will be the focus of the econometric model. The additional independent factors taken into account are: bank credit to the private sector as percent of GDP; deposits as percent of GDP; roe; non-performing loans and the Herfindahl index. The VEC model concluded in a positive relationship between economic growth and public credit, deposits and non-performing loans. Otherwise, the results displayed a negative link between economic growth and private credit, ROE and the Herfindahl index.

Keywords: Albania; bank credit; economic growth; Vector Error Correction Model (search for similar items in EconPapers)
JEL-codes: C1 G21 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ovi:oviste:v:xxii:y:2022:i:1:p:882-888

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