Do Size and Origin Matter? Evidence from the Banking Market of Bosnia and Herzegovina

Do Size and Origin Matter? Evidence from the Banking Market of Bosnia and Herzegovina

MEMIĆ, Deni
MEMIĆ, Nedim
PAŠIĆ, Sanela

This paper supports research activities related to the performances of banks in Bosnia and Herzegovina. Observing diversified, decentralized and inhomogeneous banking market of Bosnia and Herzegovina arises questions such as whether large banks are better than small banks or whether foreign owned banks are better than locally owned banks. The main purpose of this study is to compare banks of different size and ownership origin in Bosnia and Herzegovina. The dataset includes 162 bank-years data and 24 financial ratios. The results show that small banks in Bosnia and Herzegovina have significantly higher net interest margin and are better capitalized than large banks. Large banks, however earn almost double interest revenue per employee compared to small banks. Foreign banks are significantly larger compared to local banks. It is also possible to discriminate between banks of different size and origin based on their financial performance. Keywords: Bosnia and Herzegovina, banking, profitability, efficiency, size and origin

Article
PeerReviewed

ISSN 1986 – 8502,

doi:http://dx.doi.org/10.14706/JECOSS16616

International Burch University

2016

3251