(ProQuest: ... denotes formulae omitted.)Literature ReviewBanking market has been research area of interest in the previous period. Banks and their behaviour are analysed frequently in order to investigate patterns and trends that determine their profitability, efficiency and other financial indicators.The latest financial crisis has significantly affected the banking sector in Bosnia and Herzegovina causing stagnation within the sector, increase of risk costs and consecutively decrease of profitability. Despite of these global financial changes, the results within the sector vary to a great extent from bank to bank. The banking market of Bosnia and Herzegovina is in majority foreign private ownership and is characterized by domination of large foreign banks. It is also highly decentralized as two separate banking markets exist in each of the two constitutional entities, Federation of Bosnia and Herzegovina and Republika Srpska. Banking market of Bosnia and Herzegovina is fairly unexplored area, only an insignificant number of research has been conducted using data from Bosnia and Herzegovina. This research includes prediction credit default in Federation of Bosnia and Herzegovina (Memi. and Rov.anin, 2012) and assessing credit default on the banking market of Bosnia and Herzegovina using several statistical methods (Memi., 2015).Observing such diversified, decentralized and inhomogeneous banking market of Bosnia and Herzegovina arises many unanswered questions: are large banks better than small banks and are foreign owned banks better than locally owned banks? Answering such questions may indicate whether the decisions to transfer most of the Bosnian banking market from the local to foreign ownership, was a quality one. Furthermore, it may indicate whether small or large banks exhibit better performance.The main purpose of this study is to compare and discriminate banks of different size and ownership origin in Bosnia and Herzegovina or in other words, analyse different financial ratios of banks in Bosnia and Herzegovina controlling for bank size and ownership origin.To our knowledge no major research has been conducted and published on the banking market of Bosnia and Herzegovina apart from the study by Memi. and .kalji.-Memi. (2013) that assessed the efficiency scores for each bank which served as a basis for further comparisons between the banks in the period between 2008 and 2010. In this research banks were also compared based on their size and location. The results of this research have shown that individual bank efficiency varies 62 Journal of Economic and Social Studies throughout the observed period and that not all of the banks were part of the negative banking sector trend induced by the crisis. The study showed no significant difference between the performances of banks in different Bosnia and Herzegovina entities, nor between smaller and larger banks. The main reasons for lack of relevant research on the banking market of Bosnia and Herzegovina may lay in the lack of data availability data, insignificant market size in global banking proportions and lack of research funds.Globally, many different studies aimed at assessing banking market from the size, ownership, market structure, lending behaviour have been conducted. One of the studies by Micco and Panizza (2004) examines whether bank ownership is correlated with bank lending behaviour over the business cycle using multi-country data. The study has shown that state-owned banks play a useful credit-smoothing role as their lending is less responsive to macroeconomic shocks than the lending of private banks.Uchida, Udell, and Watanabe (2007) studied banking sector in a way to determine whether small banks have a comparative advantage in processing softinformation and delivering relationship lending on a unique Japanese data set. The results of this study suggest that large banks usually borrow to larger firms, as well as that large banks do not necessarily have a comparative advantage in extending transactions-based lending. …