Bank Lending Expansion in Kosovo (2015–2025): Trends in New Loans, Effective Interest Rate Dynamics, and Implications for Financial Stability

This paper examines the expansion of bank lending in Kosovo during 2015–2025, using two primary indicators: (i) the annual value of newly originated loans and (ii) the effective interest rate charged on these loans. To provide additional context on financial deepening, the analysis also reports changes in the outstanding stock of loans over 2020–2025 and summarizes selected payment infrastructure indicators for 2024 (ATM/POS terminals and payment cards). The annual series indicates that new loan origination increased from €1.102 billion in 2015 to €2.684 billion in 2025, while effective interest rates declined from 8.3% toward a 6.0–6.5% range, with a modest uptick in 2025 relative to 2024. Methodologically, the paper combines descriptive statistics, year-on-year growth rates, compound annual growth (CAGR), correlation analysis, and an exploratory ordinary least squares (OLS) specification to characterize co-movements between borrowing costs and new lending volumes. The results point to sustained long-run lending expansion (CAGR ≈ 9.3% per year), whereas recent movements in effective rates may reflect gradual risk repricing and evolving funding conditions rather than a reversal of credit demand. The findings carry implications for financial stability surveillance, transparency of the total cost of credit, and macroprudential monitoring, and are discussed in light of CBK publications and the broader literature on the bank lending channel.