Olsiana Fekaj & Lorena Kurti

Abstract
Nonperforming loans were one of the most serious obstacles that banks in the transition countries faced. They are still present in many transitional places. If in the first period of transition the causes of nonperforming loans were mainly in the inefficiency of state owned banks and enterprises, now the attention is more focused on the micro and macroeconomic environmental factors where banks operate.
This study tends to assess determinants of nonperforming loans in Albania. The purpose of this paper is to analyze the nonperforming loans in the Albanian banking system and in the same time the relation that exists between macroeconomic situation and nonperforming loans. Our main objective of this paper is to give our recommendations of what actions should banks take to reduce the non performing loans. Some of other objectives are: to analyze the present situation, to define the factors that influence in the performance of loans, to determine how affect the macroeconomic situation in nonperforming loans.
Key words non-performing loans, GDP, inflation, interest rate
JEL classification G21, C12, C13
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