The interest rate of the commercial banks in Kosovo and competition

The objective of this study paper is to analyze factors having impact in determination of the interest rates for loans and deposits in Kosovo and in the region. In the study paper are also analyised the reasons why interest rates for loans in Kosovo are evidently higher than in the countries in region and EU. The optimal policy of the interest rate is one of the essential preconditions for proper orientation of economic development of the country. High interest rates in credits (loans) make it difficult crediting conditions whereas the lower ones discourage depositors, impact of which is directly reflected into economic development. The spred of interest rate in credits and deposits is an indicator of insufficient effective competition and gives a chance for intervention with monetary and other policies to improve business environment