Reconstruction and Developments in the Banking Sector of Bosnia and Herzegovina

Reconstruction and Developments in the Banking Sector of Bosnia and Herzegovina

COSKUN, Ali
ILGÜN, Erkan

Bosnia and Herzegovina (BIH) is a young republic in the South Eastern Europe, which become independent from Yugoslavia in 1992. The independency was a though process and the economy of BIH seriously damaged in the civil war period during 1992- 1995. But BIH Economy has been reconstructed and improved by taking important steps after the war. BIH Banking sector has also been developed significantly and restructured during the last decade. This paper examines both the current situation of the banking system of the Bosnia and Herzegovina and the developments in the sector after 1995. Main economic indicators for BIH in last decade reveal a strong post-war recovery. The developing banking system in BIH laid the base for tremendous change and improvement compared to other sectors. By promoting the institutional development of the bank regulatory authorities in both entities over the past few years most inefficient and problematic banks closed and helped to change, respectively. Entering of strong foreign banks in the country leads to the result of enhancing of the level of confidence through a sharp increase in citizens deposits as well as a total deposits increasing can be concluded. In last 12 years banking sector of BIH significantly improved. For example total deposits in commercial banks of BIH increased by 769 %, total loans given by the commercial banks increased by 497 %, and total assets of the commercial banks increased by 530 % from 1997 to 2008.

Conference or Workshop Item
PeerReviewed

2009-06

138