Total Privatization of Banks – Is it the Right or the Wrong Choice?
In this material we will address an important problem, being the answer of the question; "Was the total privatization of the Commercial Banks in Albania the right thing to do? In this material we have explain why “The total privatization of the Commercial Banks in Albania”, was not the right choice! Furthermore, we will analyze and explore the system’s current status, more than 10 years after it was first applied. Detailed facts and figures have reflected the inefficient impact of the total privatization of commercial banks in the domestic economy? The areas in which we have extended our analysis are: - In the distribution of loans between sectors of production (i.e. industry, agriculture, service sectors, tourism etc..). The privatization of commercial banks has had a negative effect in some of the most important economic sectors such as agriculture, quarrying and processing industry, tourism, etc. - In the distribution of deposits and loans in Albanian Lek and foreign currency. The level of deposits and the economic growth are getting higher, however the deposits are growing at a higher rate than the economic growth. Their structure has changed in favor of foreign currency due to the lack of confidence in the Albanian lek, which has been caused by its continuous loss of value against foreign currency. This has caused the same structure in the application of loans. Foreign currency loans have a more positive effect in the rate increase of the domestic economy then the Albanian Lek loans. - In the differences between deposits and loans by type of currency. Only 50% of the deposits in Albanian Lek, with or without a maximum term, are given to economic entities in “Loan” form. The rest is used in the purchase of government debt instruments, treasury bills, while 100% of foreign currency deposits are given as loans. - In the distribution of loans by economic entities. The Loan Structure in respect of the different economic entities and different currencies is almost the same. Businesses use currency for the purchase of machinery and equipment, mostly for imports while individuals generally use the currency to make payments within the country for apartments, cars, etc. - In the distribution of loans by regions, etc… The distribution of loans shows that in general, the Albanian economy has not been supported by the right level of loans from commercial banks, therefore creating disproportionate development between different regions. Is this also one of the reasons for the declining of the population in the countryside due to it being mainly supported economically by emigrants rather than through government subsidies. The general conclusion drawn from the above data analysis is that, the total privatization of commercial banks in the Republic of Albania has had a negative consequence inthis country’s economic performance.The Albanian government should open state owned Commercial Banks.
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Mediterranean Journal of Social Sciences ISSN 2039-9340(Print) ISSN 2039-2117(Online)
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