Albanian banking system under international supervisions standards, Basel III emprirical evaluation of macroeconomic effects - Economicus

by, Jehona Gjermizi

Abstract

The aim of this article is to measure the positive and negative effects of the implementation of Basel III in the Albanian economy. The study proposes a model of evaluation of the probability of banking crises in the context of bank equity indices and long-term liquidity. The proposed model gives the opportunity of evaluating the benefits in terms of GDP by implementing rules Basel as in the short term, as well as in the long term that in the case of Albania turns out to be only 0.22% in the short term and 5% in the long term concerning the implementation of the capital requirements are expected to reduce the probability of crises with 3,06%.While meeting the requirements for liquidity reduces the probability of banking crises with 0,14%, while benefits are calculated minimum. Taking into consideration the negative effects, the basic hypothesis is that the implementation of Basel III will be associated with costs in the economy. Banks can implement the increased capital and liquidity requirements under Basel III using different strategies. The goal is to predict the impact of these new macro strategies of banks in the framework of Basel III. From the study it can be said that there is not a direct relationship between the level of capital and GDP, and the same for liquidity and GDP level connection. It is proved the link between the level of liquidity and interest rates as well as the link between the lending and interest rates.