Microfinance Institutions and Credit Unions in Albania : Regulatory, Supervisory and Market Development Issues

World Bank

Microfinance Institutions and Credit Unions in Albania : Regulatory, Supervisory and Market Development Issues

2008

World Bank

The objective of this report is to present an assessment of the current legal, regulatory, and supervisory framework in Albania for microfinance, as well as an assessment of institutions rendering microfinance services (MFIs), including the Savings and Credit Associations (SCAs) and credit unions (CUs), to identify future development priorities. Economic conditions have improved in Albania in recent years, but a significant percentage of the population is still considered below the poverty level. The report lists future development priorities for the SCAs and MFIs, emphasizing poverty reduction through microfinancing. Several MFIs, and one CU, expressed some desire to borrow from the World Bank. The report finds this promising, as long as it does not crowd out commercial sources that serve to integrate MFIs, CUs, and SCAs into the larger financial sector. The growth of SCAs might be enhanced by further consolidation of smaller SCAs into larger SCAs. Mergers based on joint objectives and bounds can expand the geographical coverage and clientele base, facilitate the increase of cash flows and access to capital, and achieve economies of scale in view of reducing fixed costs. Albania also wishes to obtain a banking license and focus exclusively on the microfinance market. A tax exemption enables CUs and SCAs to build up capital through retained earnings. Eliminating their tax exemption would either reduce their capital, or require that CUs replace the taxed earnings with other means of capitalization to maintain the same capital reserves. The report recommends that the Bank of Albania (BoA) should continue to work with the CUs on consolidating and strengthening the SCAs.

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AGROVOC Keywords

access to markets accounting agricultural cooperatives bank loans bankruptcy commercial banks consumer protection customer satisfaction debt devaluation diversification economic crises economic development economic growth equal rights exchange rate extreme poverty family farms farmers financial institutions financial market fixed assets fixed costs fraud gross domestic product hedges households income tax indebtedness information systems information technology interest rates liquidity maturity microcredit microfinance outreach remittances risk management savings small farmers unemployment urban areas village villages

Bibliographic information

Publisher

Washington, DC

Other Subjects

Capital adequacy; Funding sources; Tax-exempt; Futures; Foreclosures; Deposit mobilization; Bank loan; Financial instruments; Small loans; Current account; Private credits; Money laundering; Credit information; Credit lines; Commercial loans; Loan documentation; Umbrella organization; Tax exemption; Donor support; Loan contracts; Credit risk; Micro-enterprises; Bank interest rates; Financial support; Financial sector assessment; Monetary fund; Shareholders; Loan repayments; Debt instruments; Funding source; Prudential regulations; Liquidation; Creditors; Conflicts of interest; Credit program; Deposits; Local bank; Credits; Technical assistance; Market disciplines; Loan portfolio; Financial risk; Prudential regulation; Lending regulations; Borrowing; Financial education; Microfinance institution; Capital base; Payment system; Tax-exempt status; Defaulters; Market participants; Mfi; Microfinance loan; Institutional reforms; Money orders; Transfer risks; Credit unions; Foreign exchange; Foreign exchange risks; Prudential supervision; Debt collection; Credit bureau; Bank lenders; Minimum capital requirement; Holding; Cash transfer; Professional development; Group guarantees; Accounting standards; Value of collateral; Government securities; Commercial bank; Credit officer; Depositors; International development; Abusive lending; Lending limits; Credit associations; Issuance; Foreign exchange risk; Credit bank; Earnings; Financial institution; Securities; Market development; Warehouse receipt financing; Repayment schedules; Low interest rates; Movable property registries; Rural market; Capital requirement; Loan repayment rates; Repayment schedule; Financial products; Borrower; Micro finance; Loan portfolios; Small business; Financial system; Financial crisis; Self-employment; Access to financial services; Individual loans; Loan contract; Liquidation of collateral; Warehouse; Credit histories; Foreign debt; Credit union; Financial statements; Current accounts; Access to capital; Rates of interest; Credit bureaus; Deposit insurance; Depositor; Loan repayment; Mfis; Financial intermediaries; Interest rate; Deposit services; Market players; Micro lending; Supervisory authorities; Profit margin; Information system; Loan sizes; Fiscal autonomy; Local currency; Warehouse receipt; Borrowings; Cash flows; Loan; Mortgage; Information requirements; Financial assistance; Money transfers; Free loan; Tax exempt; Reserve fund; Microfinance sector; Credit institutions; Foreign currency loans; Savings schemes; International standards; Swaps; Risk management systems; Financial sustainability; Lender; Minimum capital requirements; Access to funds; Collateral; Loan size; Financial sector regulation; Economies of scale; Banking law; Investment bank; Reserve; Foreign currency; Macroeconomic stability; Domestic bank; Regulatory framework; Low interest rate; Bond; Credit association; Capital requirements; Movable property; Credit line; Deposit; Capital growth; Tax incentives; Rural credit; Market economy; Savings services; Microfinance institutions; Rural clients; Internal audit; Foreign currency loan

License

http://hdl.handle.net/10986/12899http://creativecommons.org/licenses/by/3.0/World BankCC BY 3.0 Unported

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