it to be less fragmented or concentrated in certain sectors of the economy. also, we are closely monitoring the financial and borrowing situation of micro - economic firms, including those in the agricultural sector. these firms have a considerable share in the gross value added and in the number of employed persons in albania. our recent surveys show that the primary concerns of smaller firms are : unfair competition ; difficulties in finding markets to sell the products ; and, to a lesser extent, limited access in financing or the cost of providing banking products and services. 1 / 3 bis central bankers'speeches we are aware that the growth of productivity, in particular for smaller firms, is very important for the economic convergence of albania. the fulfilment of needs for investing capital is a main challenge for small producers, as they have less or no borrowing history in the financial system. for this reason, the analysis with micro data are already subject of discussion in the activities and conferences organised by the bank of albania, to understand the needs of small firms and how we can help to improve the infrastructure, aiming to increase their financial inclusion in the future. productivity is important as it determines the convergence speed towards the advanced economies. so far, the productivity convergence of our countries with advanced countries is guided mostly by a re - allocation of resources from state - owned firms to private firms. nevertheless, this process has not succeeded to move further forward to the development of innovative products. unless these trends change, the albanian and regional firms will likely lose competitiveness against their eu partners. overall, it means that the economic convergence and the equality of income with eu countries will be considerably delayed. in a more specific aspect, the european integration processes will slowdown, as far as our firms will not be able to withstand the competitiveness pressures. for this reason, i think that the regional and albanian authorities should continue with the implementation of structural reforms, which aim to : increase the formalisation level of the economy, as a tool for raising competitiveness, for promoting consolidation, for improving the governance of firms, and for lowering their financing costs ; promote the development of firms in fields where the region and albania provide competitive advantages, such as tourism or the agro - industry, and in those fields that have high value added, such as the information technology or the financial services. development capital markets, as a tool to support new and innovative firms and as a partner to share the financial risk of entrepreneurs in the stage of the expansion and development. dear participants, let me

earn high profits, they have easy access to new capital from their headquarters given that they account for a small share of the loan book of their international banking group. if the build up in credit risk is underestimated, foreign banks will tend to set overambitious roe targets. when the extent of underestimation is recognized, banks have to increase their provisioning rate in line with their upward reassessment of credit risk, reducing roe projections. this could lead management of large foreign bank groups to conclude that their ambitious roe targets cannot be met and curtail lending growth in response. the entrance of big international foreign groups puts upward pressure on the entire banking system attempt to compete for borrowers. however, there is a risk that credit growth is associated with lower lending standards, enhanced by the lack of financial information available on potential borrowers that continues to be a problem in the region. as the fsap for albania indicates, in the area of corporate lending, firms balance sheets and income statements may be altered to avoid taxes, while information about remittance income for individuals is imprecise and unverifiable. the rising real estate prices in the region have also encouraged lending, using the real estate as collateral to a great extent. as real estate prices continue to rise, this could lead to an over - extension of credit, and if the real estate market becomes more speculative and more leveraged through bank loans, a decline in demand can cause a fall in real estate prices, causing both collateral to fall in value, and the ability of borrowers to pay to decline. thus, there is a greater need for authorities to monitor development in real estate prices and warn against possible asset bubbles, while the collateral needs to be less homogenous. - risks associated with the foreign exchange as a result of large financial assets euroization in all countries of the region, the foreign exchange rate fluctuations are an important source of vulnerability. stress tests in almost all countries suggests that there is limited exposure of banks balance sheets to the direct exchange rate risk as banks are able to hedge foreign currency loans wit fc deposits and sources from their parent banks. however, the dominance of loans either denominated in or linked to the euro to borrowers with income in national currency means that sudden exchange rate depreciation could threaten their capacity to repay. - vulnerabilities associated with foreign branches entry and domination turning to the issue of opening of the banking sector to foreign investors, specific issues need considerable attention