Abstract
Risk management is high on the agendas of practitioners, academics and the business community and is on the rise as it improves organizational performance and creates value for shareholders. Right risk plays an essential role in risk management in the banking system. First, a higher degree of legal protection for both lenders and borrowers has a positive effect on efficiency in the banking sector. Second, there is a positive relationship between compliance with laws and the performance of financial institutions. Third, better regulation has a positive effect on the commercial banks themselves. The distinction between the legal protections offered to investors and len- ders is important in understanding why companies’ financing structures differ from country to country. The legal and financial literature demonstrates the importance of the link between the legal system, investor protection and capital market development. Currently, the banking system of the Kyrgyz Republic (KR) is one of the main successfully developing sectors of the economy. At the same time, the legal basis of banking is the most volatile and flexible area of the legal system, since it comes from various sources - mainly from the regulatory legal acts of the National Bank of the Kyrgyz Republic, which in turn are based on international banking standards. The introduction of new banking pro- ducts is associated with the adoption of new standards and changes in existing regulatory legal acts. In this regard, the article analyzes the legal framework governing the activities of commercial banks in the republic.
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