Organized Crime, Propaganda, Blackmails of Riinvest and OSI’s Nepotism, not the Banking Sector, is a Severe Barrier

Mulaj, Isa (2014): Organized Crime, Propaganda, Blackmails of Riinvest and OSI’s Nepotism, not the Banking Sector, is a Severe Barrier.

Abstract

A report by Riinvest titled “Banking Sector: Facilitator or Barrier?”, funded by the Kosovo Foundation for an Open Society – KFOS (an affiliation of Open Society Institute – OSI), was prepared by Fadil Aliu (project manager), Alban Hashani (senior researcher), Lumir Abdixhiku (senior researcher), Diellza Gashi (researcher), Ilire Mehmeti (researcher), and Shkëlqim Cani (international consultant from the University of Tirana – former Governor of the Central Bank of Albania). The report was published in Fall 2014. The main findings of the report in question, are: i) foreign capital is dominant in 6 out of 8 commercial banks operating in Kosovo, or 89.2% of total assets in this sector are managed by foreign banks; ii) all banks have enhanced their activity, increased deposits, assets, and lending; iii) the coverage of the loans by collateral, as of 2011, was 236.1%, the highest in the region (Southeast Europe – SEE), thus the loans in Kosovo, in general, were paid back more than in any country in the region; iv) the banking sector in Kosovo is mainly concentrated in three banks that own 74% of assets, 74% of deposits, and 71.7% of loans. Riinvest identifies this as a very high concentration in the banking sector; v) highest interest rates in SEE (14.1% for individual loans, and 16.65% to business entities – SMEs); vi) the lowest SME to GDP ratio (28.3%), indicating a very low credit intermediation and weak access to bank loans by SMEs; vii) highest profit ratio: Return on Equity (ROE) 14.5% versus the average by 4% in SEE, and Return on Assets (ROA) 1.4% versus 0.3%.

• Item Type: MPRA Paper
• Language: English
• Keywords: Kosovo, banking sector, interest rates, Riinvest, KFOS, organized crime, pseudo research
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E43 - Interest Rates: Determination, Term Structure, and Effects; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

References

Dempsey, Gary and Fontaine, Roger W. (2001), Fool’s Errands: America’s Recent Encounters with Nation Building, Washington D.C.: CATO Institute.

Mulaj, Isa (2009), “Tax Reform in Emerging Transition: Is Kosovo’s Government and NGOs Mathematical Economics Rational”, Geopolitica, Vol. 7, No. 29, pp. 179-185.

Piketty, Thomas (2014), Capital in the 21st Century, Cambridge: Harvard University Press, translated by Arthur Godhammer.

Republic of Kosovo Assembly (2009), ‘Law No. 03/L-162 On Corporate Income Tax’, available at: http://www.assembly-kosova.org/common/docs/ligjet/2009-162-eng.pdf, retrieved from December 16, 2014.

Riinvest (2014), ‘Banking Sector: Facilitator or Barrier?’, Pristina: Riinvest, available at: http://www.riinvestinstitute.org/publikimet/pdf/53.pdf , retrieved from December 03, 2014.

Stiglitz, Joseph (2002), Globalization and Its Discontents, London: Penguin Books.

World Bank (2011), Doing Business 2011: Making a Difference for Entrepreneurs, Washington D.C.: World Bank.

World Bank (2014), Doing Business 2015: Going Beyond Efficiency – Economy Profile 2015 – Kosovo, 12th ed., Washington D.C.: World Bank.