This document was received by the Digital Commons on May 7, 2008 and posted on May 20,2008. Original document was submitted as an honors thesis requirement. Copyright is held by the author.

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When I chose to analyze the evolution of the Albanian banking system I had in mind the economic development of Albania today. Albanian being one of the poorest countries in Europe and a country with a developing economy became a topic of interest since the banking system is a major influence in a country’s economy.

Analyzing the evolution of the Albanian banking system will not only provide a historic view on Albania and its banking system but will also provide the necessary knowledge and historical background to be able to conclude why is the banking system in Albania shaped this way and why is the economy behaving in such a way.

This study in itself will examine the evolution of the Albanian Banking System and the path it followed based on the historical background of Albania. It will lay out the historical facts that shaped the way the Albanian Banking System has changed through time. The study is organized in six different stages. This organization is done with the purpose to recognize the different paths that the Albanian Banking System followed in certain periods of time and to distinguish one from another based on historical and economical factors.

During the analysis of the banking system importance was given to the ownership of the banks, the type of business these banks engaged and the role they played in the economy.

A great emphasis was put on the Albanian central bank and its evolution since it was the most important player in the Albanian banking system for a significant amount of time. The central banks monetary policies throughout the years and its role in the economy are discussed and analyzed.

The evolution of the Albanian Banking System is important to study because it does not only provide a historical view of the banks in Albania it also provides the necessary historical background that shaped the image of the Albania banking system. Also when this analysis is put in the context of today’s banking system in Albania and its economy it becomes easier for an outsider to really understand why Albania is a developing country, and what the economic situation really is in Albania.

Albania being a developing country brings up the idea that it is a good place of investment. Foreign investors who in the future might want to invest in Albania will need to have an understanding of its economy and banking system. Therefore a further research might analyze only the present status of the Albanian banking system and the economic stability in Albania.

Having a clear understanding of the historical facts about the Albanian banking system one can see that the Albanian market has always been open to foreign investors and even though there were a lot of set backs, Albania is once again open to foreign investment.

Therefore a more extensive research on the future of the banking system in Albania and its growth might be the next step to analyzing the potential investment opportunities in Albania. And a healthy economic and banking outlook might be the first step to attracting foreign investors in Albania.

Once again, this thesis only analyzes the evolution of the Albanian banking system. However the knowledge gathered can help understand better the banking system in Albania and maybe conduct a further analysis of Albania’s economy.