World Bank2013-10-012013-10-012005-11https://hdl.handle.net/10986/15955This Financial Sector Assessment presents the Bank's policy recommendations following an analysis of Albania's financial system, currently broadly stable, but with systemic risks which could come to the fore if the rapid pace of credit growth continues. Policies to support financial stability, and development should focus mostly on bank supervision, and the legal framework, while policies to remove impediments to the development of the nascent insurance sector are underway. Not surprisingly, the creation of a supporting legal framework is currently the main issue for capital markets. But monetary policy effectiveness should be strengthened by adjustments to the monetary operation framework, and the establishment of an interest rate bureau. Regarding corporate governance, much remains to be done. The authorities should eliminate discrepancies between the general-purpose financial reporting under the International Financial Reporting Standards (IFRS) and the regulatory reporting. Moreover, macroeconomic imbalances are rooted in structural problems in state- and socially-owned enterprises which account for 50 percent of GDP. Regarding prudential supervision issues, the NBS Bank Supervision Department (BSD) has made progress in enhancing effectiveness; however, the Basel Core Principles assessment of bank supervision was unfavorable.en-USCC BY 3.0 IGOACCOUNTABILITYACCOUNTINGACCOUNTING POLICIESACCOUNTSADMINISTRATIVE COSTSASSET CLASSIFICATIONAUDITINGAUDITORSBANK ASSETSBANK CAPITALBANK LENDINGBANK LOANSBANK PRIVATIZATIONBANK REHABILITATIONBANK RUNBANK SUPERVISIONBANKING LAWBANKING SECTORBANKING SUPERVISIONBANKING SYSTEMBANKRUPTCYBANKRUPTCY PROCEDURESBONDSBORROWINGBROKERSCAPITAL ADEQUACYCAPITAL BASECAPITAL INFLOWSCAPITAL MARKETSCAPITAL REQUIREMENTCAPITAL REQUIREMENTSCAPITALIZATIONCARCENTRAL BANKCLEARING HOUSECOMMERCIAL BANKSCOMPETITIVE ADVANTAGECONSOLIDATED SUPERVISIONCONSOLIDATIONCORPORATE BONDSCORPORATE GOVERNANCECORPORATE SECTORCREDIT BOOMCREDIT COOPERATIVESCREDIT INSTITUTIONSCREDIT RISKDAMAGESDECISION MAKINGDEPOSIT INSURANCEDEPOSITORSDEPOSITSDISCOUNT RATEDISINFLATIONDISTRESSED BANKSECONOMIC GROWTHEQUITY MARKETSEXCESS LIQUIDITYEXPORTSFINANCIAL INFORMATIONFINANCIAL INSTITUTIONSFINANCIAL LEASINGFINANCIAL MARKETSFINANCIAL POLICIESFINANCIAL REPORTINGFINANCIAL SECTORFINANCIAL STABILITYFISCAL POLICIESFORECASTSFOREIGN BANKSFOREIGN CURRENCY DEPOSITSFOREIGN EXCHANGEGDPGOVERNMENT BONDSINFLATIONINSOLVENCYINSOLVENT BANKSINSURANCEINSURANCE INDUSTRYINSURANCE LAWINSURANCE SUPERVISIONINTEREST RATEINTEREST RATESINTERNAL CONTROLSJOINT STOCK COMPANIESLAWSLEGAL FRAMEWORKLEGAL PROTECTIONLEGISLATIONLEVEL PLAYING FIELDLIABILITYLIQUIDATIONLIQUIDATION OF BANKSLOAN CLASSIFICATIONLOAN LOSS PROVISIONSLONDON CLUBMACROECONOMIC CONTEXTMACROECONOMIC STABILITYMACROECONOMIC STABILIZATIONMARKET RISKSMERGERSMONETARY POLICYMORAL HAZARDMORTGAGESNATIONALIZATIONOWN FUNDSPAYMENT SYSTEMSPENSIONSPORTFOLIOSPRICE INCREASESPRIVATE BANKSPRIVATIZATIONPRODUCTIVITYPROPERTY RIGHTSPRUDENTIAL REGULATIONSPRUDENTIAL RULESPRUDENTIAL SUPERVISIONPUBLIC DEBTRECAPITALIZATIONREGULATORY FRAMEWORKRESERVE REQUIREMENTRESERVE REQUIREMENTSRISK MANAGEMENTSAVINGSSECURITIESSHAREHOLDERSSMALL BANKSSTATE BANKSSTATUTORY AUDITORSSUBSIDIARIESSYSTEMIC RISKT-BILLSTRADE DEFICITTRADINGTRANSACTION COSTSTRANSPARENCYVULNERABILITYWEAK JUDICIARYWorld Bank10.1596/15955