Željana Vrućinić
​Edukos d.o.o., 78 000 Banja Luka, Bosnia and Hercegovina
DOI: https://doi.org/10.31410/eraz.2018.147

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4th International Conference – ERAZ 2018 – KNOWLEDGE BASED SUSTAINABLE ECONOMIC DEVELOPMENT, Sofia- Bulgaria, June 7, 2018, CONFERENCE PROCEEDINGS published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia;  Faculty of Business Studies, Mediterranean University – Podgorica, Montenegro; University of National and World Economy – Sofia, Bulgaria; Faculty of Commercial and Business Studies – Celje, Slovenia; Faculty of Applied Management, Economics and Finance – Belgrade, Serbia, ISBN 978-86-80194-12-7


The goal and contribution of this paper is to look at the importance of banks as the most important entities in the financial market and in the overall system of financing the economy. In the system of overall financing of the economy (and the state) banks get a basic role, whether it is direct crediting of enterprises, or indirectly through the financial market (securities).
BiH is ranked third in the region by the number of banks, but it is the first if this parameter is viewed on the basis of size and market development, which is why bankers and economists believe that there are too many banks and that the banking sector needs to be consolidated.
By reading this paper, we can see that with the rapid development of credit money, especially after the disappearance of the metal standard, and its active use from the modern capitalist state, through a highly developed mechanism of monetary regulation, there have been two opposite effects: first, there is an increase in the elasticity of the money supply, and secondly, there is a wider use of this mechanism in state-monopolistic capitalism, followed by a sharpening of crisis situations and disproportions in almost all modern economies. The dominance of banking capital in modern economies, constant concentration and centralization processes, the growing interest in financial and industrial capital, and the creation of a financial oligarchy, was followed by the simultaneous process of creating large international banks, the process of creating multinational societies, along with the simultaneous process of diversification of jobs by which modern banks increasingly deal in regular business.
Financial instability is a greater danger to the economic system and central banks, which is why financial stability is expected to become a priority goal for these institutions. The global financial crisis and the wave of bankruptcy of banks and a large number of other institutions opened a new discussion aimed at redefining the objectives of the monetary policy. The research was carried out using the standard methodological procedure, using local and foreign professional literature (books, articles, journals, reports from relevant institutions) and publications related to this issue in the region. Methods of induction and deduction, systematization and methods of analysis and synthesis were applied to these data. Poor economic and credit activity in the country in the past two years, as well as a relatively high proportion of non-performing loans in total system-level loans, imposed a need to find a systematic solution to the issue of non-performing loans. Domestic institutions have begun to create a comprehensive framework for resolving the issue of non-performing loans and to ensure a better position for commissioners, better protection of the guarantors, faster collection of claims, as well as disruption of the borrower’s business activities up to the moment of settlement of the commitments, thus creating better conditions for providing significant support of the banking sector to the economic growth of BiH

Key words

issuance, central bank, multiplication, interest rates, liberalization.


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