Monetary policy and its impact on consumer behaviour toward banks: Evidence and policy implications for Albania

This article examines how monetary policy influences consumer behaviour toward commercial banks in Albania. It develops an integrated framework combining the interest-rate channel, the bank-lending channel, the balance-sheet channel, expectations, inflation perceptions, exchange-rate exposure, trust, financial literacy and behavioural biases. It combines a structured literature review with descriptive secondary evidence from the Bank of Albania, World Bank and International Monetary Fund, focusing on 2004–2024 and the tightening and easing cycle of 2022–2024. The Albanian case is distinctive because of partial euroisation, uneven financial literacy, the importance of remittances, a bank-centred financial system and the growing use of digital channels. Evidence from 2024 illustrates the speed and asymmetry of transmission: the Bank of Albania reduced the policy rate from 3.25 per cent to 3.00 per cent in July and to 2.75 per cent in November, while estimating that loan rates were already around 0.4 percentage points lower than under a no-cut counterfactual. The article concludes that consumer responses are heterogeneous across income, age, indebtedness, currency exposure and digital capability. It proposes a policy agenda based on clearer central-bank communication, stronger disclosure of variable-rate and foreign-currency risks, behavioural consumer protection, improved financial education, better data on household expectations and more transparent bank pricing. The paper contributes by connecting macro-monetary transmission with micro-level banking behaviour in a small, open and partially euroized economy.