Competition of the financial system in light of globalization
Competition of the financial system in light of globalization

Summary/Abstract: In the context of numerous discussions on the competitiveness of the banking system in Albania and abroad, major problems arise on the level of economic and cultural opening of our region and the impact of this opening performance on the banking system. Albania comes from a centuries-old experience of isolation and economic autarky. In the past two decades, progressive opening of markets and borders has created a convergence process of our country to the region and to the European continent. Besides the traditional performance and competition indicators of the banking system, would be worth discussing the question in the context of globalization. The purpose of this paper is to analyze the effect of globalization in general, on competitiveness and performance of banks in Albania compared with the region. Through an individual fixed effect analysis, the article will study the relationship between the concentration index (C3 Index) and performance of banks in Albania and the region and also to the globalization index to each of the countries analyzed. Pattern analysis covers a span of 12 years (2002- 2013) with quarterly data. The key variables to be discussed in the study are the following: globalization index (KOP), competitiveness index (C3) and performance indicator (Return on Equity). The Globalization Index is an indicator, which is built on the basis of indicators of economic globalization (weight 36%), social globalization (37%) and political globalization (26%). A significant relationship of globalization to market competition is expected in this article. This paper is expected to open a new path to academic discussion, not only in the context of economic globalization but also to the region’s approach to the removal of economic barriers.

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