Albanian financial system in front of global & financial crisis - a new approach to ensure long-term sustainability

Abstract

The intertwined global financial and economic crisis of 2008, unfolded the total exposure of the Albanian financial 
system in front of the systemic risk, by the Albanian banking system, as the absolute pillar of providing funding 
and intermediation in the economy. This cartel-like financing highway of the economy, developed by an 
oversized bank –based economy, could and practically downloads all the issues, pitfalls and inefficiencies of the 
banking system, on the shoulders of companies and individuals as borrowers, especially in times of economic 
contraction or crisis. This one-pillar financial system in Albania does not offer guarantees for a long-term 
sustainable economic development, which in turn, calls for a more balanced development of this system.  
This paper proposes that, a more balanced financial system, subject to inter sectorial competition, with the 
presence of ever-developing nonbank pillar, the development of capital market and its respective long-term 
instruments and institutional investors, along with new areas of banking business (agriculture funding, private 
banking, etc.) could make a valuable contribution, not only to the sustained economic growth, increased 
competition, but also in alleviating the factors and premises, which ignited and energized the unprecedented 
global & financial crisis of 2008.