Trends behind Implementation of Basel Core Principles in Banking Sector of Bosnia And Herzegovina - A Look Back and a Look Forward

The aim of this paper is to analyze banking regulation in Bosnia and Herzegovina (B&H), as well as the reflection of implementation of Basel Core Principles on business of banks and certain trends in domestic banking. Questionnaire survey is used to investigate on possible concrete progress that is achieved in developing of the banking sector in B&H over the past decade. This paper represents the results of a research carried out on 19 out of 28 planned banks in B&H that were surveyed during summer of 2012. In addition, this paper analyzes the qualitative research whose main goal is to gain the respondents’ opinions about the past experiences and possible concrete progress that has been made in developing of the banking sector in B&H. Summarized results of the questionnaire, also, show that the consolidation of domestic banking market, although slow, is not yet fully completed and that the regulation in the field of banking supervision has a positive impact on improvement of the banks’ soundness, discipline and strengthening of their competitiveness. Additionally, our findings indicate that it can be expected to reduce the number of banks over the next several years. The banks are aware of the importance of the capital and its role in the stability of the banking sector in connection with the required minimum amount of capital supporting their needs to maintain capital requirements.