engleski

Adjustment of banking system in Bosnia and herzegovina to EU banking system

European integration is a strong factor of internationalization of the banking systems and changes in their market structure, as well as the conditions and limits of their activity. Banking systems in the EU candidate countries, among which is also Bosnia are Herzegovina, are exposed to a constant transformation process and deep reforms. By opening to the EU, national systems of candidate countries are faced with changes that are occur in the banking and financial systems of developed countries. These changes, caused by information technology and the internationalization of markets, do not just imply mergers and acquisitions of banks, but also change of structure of income from banking activities and the supply of new, diversified financial services to the clients. Circumstances in developing countries (including Bosnia and Herzegovina), such as undeveloped legislation, limited activities of financial institutions and unstable political situation, affect and limit positive effects of capital market. Also, most of the markets in developing countries are small and as such are not competitive at the European level. In these countries, stability of the banking sector is the basis of overall stability of economy. Unfavorable circumstances results in low turnover and low capital market. Globalization of financial markets leads to the creation of financial conglomerates and stock association, wherein small stock exchanges and domestic financial institutions must adapt to change. Bosnia and Herzegovina and other developing countries must open their goods, services and capital markets, and ensure their free movement for the purpose of achieving greater involvement in European and global economy. Inclusion of banking systems of candidate countries in the EU internal market opens the question of their competitiveness and general fulfillement of integration condition. Furthermore, integration opens question of conditions and bank operations in the new environment which resultied from constant process of adaptation to EU institutional and legal framework. High quality and timely adjustment of banking system in Bosnia and Herzegovina to EU standards, through institutional and organizational reforms, can provide certain benefits and reduce costs for users and providers of banking services and the entire banking sector.

banking system ; adjustment ; EU ; Bosnia and Herzegovina

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