World BankInternational Monetary Fund2014-04-112014-04-112014-02https://hdl.handle.net/10986/17769Although the Albanian financial system withstood the shocks of 2008 global crisis relatively well, it continues to operate in highly uncertain macroeconomic environment, which triggers increased vulnerabilities in the system. The decline in profitability, growing non-performing loans (NPLs), substantial level of euroization, continued deleveraging of foreign bank subsidiaries and significant investments in government bonds in the absence of active secondary market are the main challenges that banking system faces. Given strong trade and financial links with euro area, the financial system and real sector in general are increasingly vulnerable to external shocks as well. Since 2007 the Bank of Albania (BoA) has introduced several macro-prudential measures to safeguard financial stability in the country. Higher risk weights and stricter loan-to-value and debt-to-income ratios were placed on banks surpassing twin limits on the rate of credit growth and NPL levels. A second set of macro-prudential policies was put in place in late 2011 to limit contagion risks and international spillovers: (i) foreign bank branches were converted into subsidiaries; (ii) liquidity regulations were tightened; and (iii) the regulation on related-party exposure was enhanced. In addition to that, the risk weights for unhedged borrowers were increased to 150 percent and a limit of such loans was set to 400 percent of capital. Overall, financial reporting legislation in Albania has improved recently and has a high degree of alignment with the acquis communautaire of the European Union (EU).en-USCC BY 3.0 IGOACCOUNTINGARREARSASSET QUALITYASSET RATIOASSET VALUEAUCTIONAUCTIONSAUDIT COMMITTEESAUDIT STANDARDSBAILIFFBAILIFFSBALANCE SHEETBALANCE SHEETSBANK ASSETSBANK BRANCHESBANK CREDITBANK DEPOSITSBANK HOLDINGSBANK MARKETBANK PROFITABILITYBANK SUPERVISIONBANKING LAWBANKING SECTORBANKING SECTOR ASSETSBANKING SYSTEMBIDBIDSBOND ISSUINGCAPITAL ADEQUACYCAPITAL MARKETSCAPITAL REQUIREMENTSCAPITALIZATIONCASH MANAGEMENTCENTRAL BANKCENTRAL SECURITIES DEPOSITORYCIVIL CODECOLLATERALCOLLATERAL POLICYCOLLECTIVE INVESTMENTCOMMERCIAL BANKSCOMPENSATION FUNDCONTINGENCY PLANNINGCORPORATE GOVERNANCECREDIT ASSOCIATIONSCREDIT COOPERATIVESCREDIT GROWTHCREDIT LOSSESCREDIT POLICIESCREDIT RISKCREDITORSCURRENT ACCOUNT DEFICITDEBT ISSUANCEDEBT ISSUANCESDEBT MARKET DEVELOPMENTDEBT RESTRUCTURINGDEBT SECURITIESDEPOSITDEPOSIT INSURANCEDEPOSITORSDOMESTIC BANKINGDOMESTIC DEBTDOMESTIC DEBT MARKETDOMESTIC MARKETDURABLEDURABLE GOODSENFORCEMENT POWERSEQUIPMENTEQUITY RETURNEUROBONDEXCHANGE RATEEXPENDITUREEXTERNAL BORROWINGEXTERNAL DEBTFINANCIAL ASSETSFINANCIAL CRISISFINANCIAL DEVELOPMENTFINANCIAL INSTITUTIONFINANCIAL INSTITUTIONSFINANCIAL MARKETSFINANCIAL RISKSFINANCIAL STABILITYFINANCIAL STATEMENTSFINANCIAL STRESSFINANCIAL SYSTEMFISCAL DEFICITSFOREIGN BANKFOREIGN BANKSFOREIGN CURRENCYFOREIGN CURRENCY LOANSFOREIGN CURRENCY RISKSFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETFOREIGN EXCHANGE MARKETSFRAMEWORK FOR REPO TRANSACTIONSGOVERNMENT BONDSGOVERNMENT DEBTGOVERNMENT DEBT MARKETSGOVERNMENT SECURITIES MARKETSGRANT FUNDINGHOLDINGHOLDINGSHOLDINGS OF GOVERNMENT SECURITIESINFLATIONINSOLVENCY REGIMEINSTITUTIONAL CAPACITYINSTRUMENTINSURANCEINSURANCE COMPANIESINSURANCE MARKETINSURANCE MARKETSINSURANCE PREMIUMINSURANCE PRODUCTSINTEREST RATEINTEREST RATE RISKINTEREST RATESINTERNAL AUDITINTERNATIONAL FINANCEINTERNATIONAL STANDARDSINVESTMENT BANKINVESTMENT FUNDINVESTMENT FUNDSINVESTMENT OPPORTUNITIESINVESTMENT STRATEGIESINVESTOR BASEISSUANCELABOR MARKETLABOR MARKETSLEGAL FRAMEWORKLEGAL PROTECTIONLENDERLENDER OF LAST RESORTLEVEL PLAYING FIELDLIABILITYLIQUID ASSETSLIQUIDATIONLIQUIDITYLIQUIDITY MANAGEMENTLIQUIDITY POSITIONLIQUIDITY RISKLIQUIDITY RISKSLOANLOAN PORTFOLIOLOAN PORTFOLIO AS COLLATERALLOAN PORTFOLIOSLOCAL MARKETMACROECONOMIC ENVIRONMENTMARKET ACCESSMARKET BORROWINGMARKET FOR GOVERNMENT SECURITIESMARKET PARTICIPANTSMARKET RISKSMARKET VALUEMATURITIESMATURITYMATURITY MISMATCHESMONETARY POLICYMONEY MARKETNATIONAL BANKNON PERFORMING LOANSNON-PERFORMING LOANSNONPERFORMING LOANSNPLOPERATIONAL INDEPENDENCEOUTSTANDING LOANSPENSIONPENSION FUNDSPENSION REFORMPENSION SYSTEMPENSIONSPOST OFFICESPRICE DISCOVERYPRIMARY MARKETPROVISIONING RULESPRUDENTIAL REGULATIONPRUDENTIAL STANDARDSPUBLIC DEBTPUBLIC DEBT HOLDINGPUBLIC DEBT MANAGEMENTREAL ESTATE LOANSREGULATORY AUTHORITYREGULATORY FRAMEWORKREPAYMENTREPOREPO MARKETRESERVESRETAIL INVESTORSRETURNRETURN ON ASSETSRETURNSRISK EXPOSURERISK FACTORSRISK MANAGEMENTSAFETY NETSECONDARY MARKETSECONDARY MARKET ACTIVITYSECONDARY MARKET PARTICIPATIONSECURITIESSECURITIES TRANSACTIONSSETTLEMENTSETTLEMENT RISKSSHAREHOLDERSSHORT-TERM DEBTSOLVENCYSOVEREIGN DEBTSOVEREIGN RISKSSTOCK EXCHANGESUPERVISORY AGENCIESSUPERVISORY AUTHORITYT-BILLSTAXTAX CODETAX POLICYTAX TREATMENTTERRORISMTRANSACTIONTRANSPARENCYTREASURYTREASURY BILLSTREASURY BONDSUNDERLYING ASSETSVALUATIONVALUATIONSWITHDRAWALWORKING CAPITALYIELD CURVE10.1596/17769