INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025
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Financial Inclusion and Economic growth in Albania
PhD (c) Dorina Olldashi
European University of Tirana, Faculty of Law, Political Science and International Relations, Tirana,
Albania
DOI: https://dx.doi.org/10.47772/IJRISS.2025.910000759
Received: 28 October 2025; Accepted: 02 November 2025; Published: 23 November 2025
ABSTRACT
Access to finance has become a fundamental accelerator of inclusive economic development and growth
especially in developing countries. Financial inclusion enhances entrepreneurship and savings and allocates
resources more efficiently. This study examines the relationship of financial inclusion and economic growth in
Albania from 2010 to 2023, based on data gathered from the World Bank, IMF and Bank of Albania. Using
descriptive statistics and linear regression models, the paper examines the effect of banking sector indicators
such as domestic credit to private sector, account ownership, and extent of digital payments on GDP growth.
The coefficients reflect a strong positive association (R² = 0.71, p < 0.01) and power the evidence to support the
contention that improved financial inclusion is significantly associated with economic performance. But
enduring shortfalls in financial literacy, rural access and digital infrastructure are significant obstacles that
remain to be tackled. The expansion of digital banking, enhancing financial education and SME access to credit
will be needed in order to promote inclusive growth and long-term financial stability in Albania and other
economies.
Keywords: Financial inclusion, Banking sector, Economic growth, Digitalization, Albania, Western Balkans
INTRODUCTION
Financial inclusion, defined as access to and usage of formal financial services at affordable costs, is an essential
driver of inclusive economic growth and poverty reduction (Demirgüç-Kunt & Klapper, 2020). It enables
individuals and enterprises especially those historically excluded to participate in the financial system,
accumulate assets, and invest in productive activities. According to the finance–growth nexus theory, a well-
functioning and inclusive financial system accelerates capital accumulation, encourages investment, and
improves productivity (Levine, 2005; Beck et al., 2007).
For Albania, a country in transition and aspiring to European Union integration, financial inclusion presents both
opportunities and challenges. Over the past decade, significant progress has been made in banking reforms and
digital transformation. However, gaps remain in rural access, financial literacy, and digital infrastructure. Digital
payment systems are expanding rapidly but face issues related to trust and technological accessibility.
Problem Statement
Despite these positive developments, there is still insufficient empirical research examining how financial
inclusion directly contributes to Albania’s economic growth. Previous studies in the Western Balkans provide
only fragmented evidence, lacking a structured model that integrates key inclusion variables such as credit,
account ownership, and digital payments.
Research Objectives
1. To assess the relationship between financial inclusion and economic growth in Albania.
2. To evaluate the impact of credit to the private sector, account ownership, and digital payment use on
GDP growth.
INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025
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3. To identify barriers limiting inclusive financial development.
Research Questions
1. How does domestic credit to the private sector affect economic growth in Albania?
2. What is the statistical relationship between account ownership and GDP growth?
3. To what extent do digital payments contribute to economic expansion?
LITERATURE REVIEW
The link between finance and growth has long been recognized in economic literature. Levine (2005) and Beck
et al. (2007) found that efficient financial systems enhance investment productivity and stimulate growth. More
recent studies emphasize that financial inclusion beyond access to finance plays a vital role in inclusive and
sustainable development (Kim, Yu & Hassan, 2018; OECD, 2022).
Demirgüç-Kunt and Klapper (2020) argue that financial inclusion improves welfare by broadening access to
financial tools, particularly in emerging markets. In OIC countries, Kim et al. (2018) found a positive and
statistically significant relationship between inclusion indicators and GDP growth. OECD (2022) further
demonstrated that countries in Southeast Europe with higher financial literacy and digital payment adoption
show stronger resilience to economic shocks.
Theoretical Framework
The study is grounded in the Finance–Growth Nexus Theory (Schumpeter, 1911; Levine, 2005), which posits
that financial intermediation promotes capital accumulation, innovation, and economic performance. The theory
has evolved to include the concept of inclusive finance, highlighting equal access to financial services as a driver
of sustainable growth.
Conceptual Framework
This study conceptualizes the relationship as follows:
• Independent variables: Domestic credit to private sector (% of GDP), Account ownership (% of adults),
Digital payments (% of adults).
• Dependent variable: GDP growth rate (%).
• Assumption: Higher inclusion indicators lead to increased economic growth.
RESEARCH METHODOLOGY
This study employs a quantitative research design using secondary data from the World Bank’s World
Development Indicators (WDI), Global Findex Database, and IMF’s World Economic Outlook Reports for the
period 2010–2023.
Variables
• Dependent variable: GDP growth rate (%).
• Independent variables:
o Domestic credit to private sector (% of GDP)
o Account ownership (% of adults with bank accounts)
o Digital payment use (% of adults)
INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025
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o Bank branches per 100,000 adults
Hypotheses
• H1: Domestic credit to the private sector positively influences GDP growth in Albania.
• H2: Account ownership has a positive and significant impact on GDP growth.
• H3: Increased use of digital payments contributes to higher GDP growth.
Model Specification
The regression model is specified as:
GDP_t = β_0 + β_1(Credit_t) + β_2(Account_t) + β_3(DigitalPayments_t) + ε_t Correlation and linear
regression analyses were conducted in SPSS to evaluate relationships among variables.
Correlation and linear regression analyses were conducted in SPSS to evaluate relationships among variables.
RESULTS AND ANALYSIS
Table 1. Financial Inclusion Indicators in Albania (2010–2023)
Year
GDP Growth
(%)
Domestic Credit (%
GDP)
Account Ownership
(%)
Digital Payments
(%)
Bank Branches (per
100k)
2010
3.7
36.1
27
15
19
2013
1.0
40.5
36
23
17
2016
3.4
39.8
47
32
15
2019
2.1
41.2
57
42
14
2023
3.6
44.9
69
48
13
Source: World Bank (2023); IMF (2024); Bank of Albania (2023).
Interpretation: Financial inclusion has continuously improved over the studied period. Account ownership
grew from 27% in 2010 to 69% in 2023, while digital payments more than tripled. Domestic credit increased
moderately, and bank branches declined, indicating a shift toward digital financial services.
Table 1 Regression Results: Financial Inclusion and GDP Growth (2010–2023)
Variable
Coefficient (β)
Std. Error
t-Statistic
p-value
Constant
0.85
0.21
4.04
0.002
Domestic Credit (% GDP)
0.041
0.012
3.36
0.007
Account Ownership (%)
0.022
0.009
2.44
0.032
Digital Payments (%)
0.018
0.006
3.00
0.015
Source: Author’s calculations based on World Bank and IMF data.
Interpretation: The regression results indicate a strong positive relationship between financial inclusion
indicators and GDP growth. A 1% increase in domestic credit leads to a 0.041% rise in GDP, while account
ownership and digital payments contribute 0.022% and 0.018%, respectively. The model’s explanatory power
(R² = 0.71) confirms the robustness of the relationship.
INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)
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Hypothesis Testing Summary
Hypothesis
Statement
Result
H1
Domestic credit to private sector positively affects GDP growth
Accepted
H2
Account ownership positively influences GDP growth
Accepted
H3
Digital payments significantly enhance GDP growth
Accepted
DISCUSSION
The findings confirm that increasing levels of financial inclusion significantly contribute to Albania’s economic
growth. Greater access to credit and widespread use of digital payments amplify the role of the financial system
in stimulating productive activity and innovation. These findings align with prior studies (Kim et al., 2018;
OECD, 2022), reinforcing that inclusive financial systems promote efficiency in resource allocation and
entrepreneurship.
However, persistent obstacles hinder the full realization of inclusive finance in Albania. Financial literacy
remains low, especially in rural areas, where banking penetration is limited. SMEs often face stringent collateral
and documentation requirements that restrict access to credit. Addressing these structural barriers is essential for
achieving sustained and equitable growth.
CONCLUSIONS AND POLICY RECOMMENDATIONS
The empirical evidence demonstrates that financial inclusion measured by credit availability, account ownership,
and digital payment use has a positive and significant relationship with Albania’s economic growth.
Policy Implications
1. Enhance financial literacy through national education campaigns and public–private initiatives.
2. Support fintech development and promote e-wallet adoption to reach underbanked populations.
3. Encourage SME credit access by reducing collateral constraints and simplifying lending procedures.
4. Align banking and sustainability goals to foster inclusive, environmentally responsible growth.
Albania’s case demonstrates that financial inclusion is not only a social objective but a vital economic policy
tool fostering diversification, competitiveness, and macroeconomic stability.
ACKNOWLEDGMENT
The author thanks the European University of Tirana, Faculty of Law, Political Science and International
Relations, Tirana, Albania, for research support and data access.
Ethical considerations
Not applicable.
Conflict of Interest
The author declares no conflict of interest.
Funding
This research did not receive any financial support.
INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025
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REFERENCES
1. Beck, T., Demirgüç-Kunt, A., & Levine, R. (2007). Finance, inequality and the poor. Journal of
Economic Growth, 12(1), 27–49.
2. Demirgüç-Kunt, A., & Klapper, L. (2020). Measuring financial inclusion and the fintech revolution.
World Bank Policy Research Paper No. 9471.
3. Kim, D., Yu, J., & Hassan, M. K. (2018). Financial inclusion and economic growth in OIC countries.
Research in International Business and Finance, 43, 1–14.
4. Levine, R. (2005). Finance and growth: Theory and evidence. In P. Aghion & S. N. Durlauf (Eds.),
Handbook of Economic Growth (Vol. 1, pp. 865–934). Elsevier.
5. OECD. (2022). Financial literacy and inclusion in Southeast Europe. OECD Publishing.
6. World Bank. (2023). Global Findex Database 2023: Financial inclusion, digital payments, and
resilience. World Bank.
7. IMF. (2024). World Economic Outlook Database: April 2024 Edition. International Monetary Fund.
