Regulation in the Banking Sector of Bosnia and Herzegovina and Deposit Insurance Systems

Abstract

Problems in the bank's operations, regardless of its size, are reflected in the overall financial system in which losses can occur, unless the state does not prevent the disruptive influence of the problematic bank at the level of the overall banking sector in a timely manner. One of the ways to prevent possible problems in the financial system of a state is to conduct supervision of the bank's operations. A safe and transparent banking system affects the increase of savers who decide to invest their capital in banks. Monitoring of bank's operations in Bosnia and Herzegovina is not carried out only by supervisory and regulatory bodies. Banks are obliged, according to Basel II, to publish general information about the adequacy of capital and its structure, about exposure to risks such as market, card, operational, interest rate risk. Within the banking sector it is possible to identify some of the sources of their weaknesses, such as: inadequate bank management structure, the presence of implicit or explicit forms of government guaranteeing deposits, lack of information on the financial position and status of the bank due to the application of inadequate accounting standards.