The efficiency of Banks Credit Portfolio Allocation, An Application of Kernel Density Estimation on a Panel of Albanian Banking System Data

This study investigates the efficiency of credit allocation in Albania, with a particular focus on the use of kernel density estimation as an alternative estimation methodology for pooled and panel data sets. We focus on the allocation of banks credit portfolio (credit to business) to investigate whether sectorial distribution of credit after 2008 reflects the trends of sector developments (in terms of expansion), performance of credit portfolio and banks own characteristics. Empiric analysis is based on the adoption of kernel density estimation, for the panel datasets. Conclusions are based on the estimation and interpretation of multidimensional joint densities.