BANKING SECTOR DEVELOPMENT AND CHALLENGES IN ALBANIA

Albanian banking system during its development has faced a lot of challenges that differ in time. This paper discuss the problem of its development from the early stage of transition until nowadays and give some suggestions in order to address current problems of Albanian banking system. The present analysis focuses on developments in the second half of the current decade (2005 - 2010). As for the general lines of banking sector transformation, we chose a somewhat longer time frame, starting from the 1990s, so as to put developments into perspective. The analysis of banking development through level of financial intermediation, supervision framework changes, level of competition, financial performance etc is at the very core of our topic and thus we explore it in greater detail than the other aspects. This focus is underlined by our paper of both country and cross-country data. A set of key structural and prudential indicators as well as different study regarding banking sector development are used. Bank development in CEE, SEE countries serves as a benchmark against which developments in Albania are assessed.