This article analyses the determinants of inflation in Albania during the transition period. We attempt to explain why Albania was successful in reducing inflation, by the end of 1995, to a level comparable to many countries in the European Union. We discuss the relative importance of monetary, fiscal and external variables, and we highlight the role of remittances by emigrants. Using vector autoregression analysis, we demonstrate how shocks to money growth and remittances affect the subsequent paths of inflation and the exchange rate. Our main conclusion is that, while there are important lessons from the Albanian experience for other ex-communist countries, the presence of large-scale emigration and huge remittance flows makes Albania unique among European countries in transition, in the extent to which these factors aided the anti-inflation programme. However, recent events have demonstrated that political stability and control of the informal financial sector are also crucial for low inflation.Inflation, Stabilisation, Remittances, Albania,

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The Greek economy was affected very badly by the global economic and financial crisis of 2007-2008. The main reason of this catastrophic event is that the country's speedy economic and financial growth in the pre-crisis period heavily based on the foreign funds, and the flow of these funds stopped immediately -even turned to opposite direction-with the spread of the crisis to Europe. This negative happening as well as the rearrangement of the public debts and remarkable reduction in the bank deposits led to a big financial crisis, and thus economic recession. Meanwhile, the loan quality in the banking system worsened extremely -almost half of the credits turned to bad loan-due to the macroeconomic deterioration as well as the banks' very tolerated lending policies before the crisis, the borrowers' imperfect attitudes, and improper governance. The improvement in NPLs ratio, which started simultaneously with the modest economic recovery in 2017, decreased it to 30.2 percent in 2020 from its peak level of 48.5 percent in 2016. However, a big part of it has been achieved thanks to write-offs and loan-sales.In this study, it was aimed to measure the effect of the changes in economic growth on these drastic changes in NPLs ratio. Although the changes in the gross domestic product (GDP) and NPLs ratio have always been in consistency with the economic theory, except the pandemic year of 2020, the often big differences between their changing rates imply that some other factors have also played significant role on NPLs movements. The findings of some studies for Greece indicate to remarkable impact of both economic growth and the other factors on bad loans issue. The results of our regression analysis also show that the relation between economic growth and NPLs is not so strong.In spite of the noticeable improvement, NPLs ratio is still at a very high level and requires constant remarkable declines in order to come down to the generally accepted levels. To perform this and have economic and financial recovery at the same time, the recovery should not be achieved only by write-offs and portfolio sales, but by collections from borrowers, and executions. The banks and the government should make the necessary changes in their policies and applications so as to decrease NPLs ratio through new lending, compromise with proper borrowers, and court executions.