FINANCIAL STABILITY OF BANKING SECTOR IN BiH

Abstract

The question of achieving and maintaining financial stability is one of the main questions after the global financial crisis. Experts are focused on researches on methods and instruments which could prevent new unstable situations. Financial soundness indicators represent very useful tool and help in assessing the state of the banking sector. Relating to that, aim of this research is to investigate possible effects those indicators could have on financial stability, with a special focus on banking sector of Bosnia and Herzegovina. In that purpose different scientific methods were used, including data on the main set of financial soundness indicators related to relevant state institutions, agencies and the Central Bank of Bosnia and Herzegovina. The results show that according to indicators banking, sector of Bosnia and Herzegovina is stable, but it should pay attention to the level of non-performing loans and the associated credit risk, as well as other factors within the country and in the region which have a significant impact on financial stability.