Abstract
Abstract. Lending is an important element for the economy of a country. Credit leads to an increase in spending, thus increasing revenue levels in the economy. This revenue growth brings a higher GDP (gross domestic product) and thus increases productivity. This paper aims to analyze whether there is a correlation between private sector credit and economic growth for the period 1996-2021 in the case of Albania using econometric models. We have to say that credit is one of the important elements of the financial system. Financial development over the years has brought a variety of products offered by the banking sector. But we must remember that lending, which is one of the main elements of this system, was one of the factors that caused the global crisis in 2008-2011. Hence, this study aims to discern whether lending has positively impacted the Albanian economy or not, considering its potential negative effects. It is a widely held belief that the absence of credit prevents a country's economic development, and this paper seeks to determine the accuracy of this claim. Due to the negative impact of credits on the economy in this paper we intend to survey how the loan has really affected the Albanian economy.
Keywords. Bank lending; Financial development; Economic growth.
JEL. E43; E51; G38.
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