More informal loans

Sotiraq Dhamo, professor at the Faculty of Economy and a senior consultant of large business groups, says that informal business in a time of crisis might lure many victims.

“It is a lubrificant for the loan, as long as the official loaning system is not working properly for different reasons. It is a very accessible system, very direct, fast and without formalities. You can take the sum that you want, when you want”, Dhamo says.

But he warns that if not supervised properly, this could go out of control and bring high costs not only for the economy.

“In case of the lack of state control, such as the actual situation of Albania, this phenomenon cannot be controlled and could turn into a social and economic problem, because when people can’t resolve their problems through law, they will turn to self justice and ‘Kanun’”, Dhamo declared.

Olti Rrumbullaku, a finance professor, says that the informal loans always bring higher dangers than the official ones.

“The main problem of informal loan is the absolute personal nature, which is not well studied and evaluated, bringing a huge financial risk. It has higher interests that do not respond to the results that the business might bring. Businesses have low results and could bring even losses, making owners turn to loans with very high interests for better results”, Rrumbullaku declared.

A poll led by the Central bank last year foun that more than 18% of the Albanian families have used informal loans. Experts say that the phenomenon has affected many businesses, which have been unable to secure a formal loan from banks. These loans can thrive outside the legal borders, especially in a time of crisis.

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