A Financial Systemic Stress Index for Albania

The latest financial crisis reflected the need to properly understand, measure and possibly project the systemic events, which have a high probability of interrupting of the normal functioning of the financial markets, resulting in a suffering of the economic growth. The aim of this paper is to present a Financial System Stress Index for Albania, which aims to capture the level of financial stress of the economy in a single and comprehensive index (FSSIA). We assess the interlinkages of the different market segments through evaluating their impact on economic growth, hence providing a clear method in discussing the evolution of the subindices of the banking sector, money market, foreign exchange rate and housing market into the financial stress.