Dissertation Title: Price stability and financial stability in a small, open and highly euroized economy; interaction and implications for the central bank
Authors: Gent Sejko
- Institution: University of Tirana, Faculty of Economics, Department of Economics
- Field of study: Economic Sciences
- Publication date: 03.08.2026
- The dissertation is published in Albanian.
© Copyright: Gent Sejko
Published by the University of Tirana
Based on legal acts, regulations and policies of the UT.
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Abstract: Among the main consequences of the 2007-2009 financial crisis was the deterioration of conditions in global financial markets, accompanied by an increase in episodes of systemic risk in developed and developing countries. These consequences were evident in most economies of the world for a considerable period after the crisis. Especially in small economies with underdeveloped financial markets, where crises cause sudden interruptions in the financial and credit cycle, banking stability becomes an essential factor in the transmission of monetary policy. The literature has demonstrated the inverse interaction between monetary policy and financial stability, raising the question of whether monetary policy should also address financial stability objectives. This material, through the analysis of the characteristics of the Albanian economy and financial system over more than two decades, provides a comprehensive overview of the way in which the Bank of Albania, in addition to its focus on price stability, has strengthened its attention to financial stability. Empirical results show a significant link between monetary policy and financial stability, as well as the impact of monetary actions on financial stability. The study suggests that macroprudential policies increase the autonomy of monetary policy, directly affecting economic activity, inflation and the exchange rate, and reducing the need for strong monetary responses.
Keywords: Monetary policy, banking health, macroprudential policy
Abstract: Among the main consequences of the 2007-2009 financial crisis was the deterioration of conditions in global financial markets, accompanied by an increase in episodes of systemic risk in developed and developing countries. These consequences were evident in most economies worldwide for a considerable period after the crisis. Especially in small economies with underdeveloped financial markets, where crises cause sudden interruptions in the financial and credit cycle, banking stability becomes an essential factor in the transmission of monetary policy. The literature has demonstrated the reciprocal interaction between monetary policy and financial stability, raising the question of whether monetary policy should also address financial stability objectives. This material, through the analysis of the characteristics of the Albanian economy and financial system over more than two decades, provides a comprehensive overview of the way in which the Bank of Albania, in addition to its focus on price stability, has strengthened its attention to financial stability. Empirical results show a significant relationship between monetary policy and financial stability, as well as the impact of monetary actions on financial stability. The study suggests that macroprudential policies increase the autonomy of monetary policy, directly affecting economic activity, inflation and the exchange rate, and reducing the need for strong monetary responses.
Keywords: Monetary policy, banking health, macroprudential policy