Some Issues with the Establishment of Financial Safety Net: Evidence from Bosnia and Herzegovina

In economic and political environment is exposed of each country of SEE acceleration and strengthening market discipline and protection of the credit system are a priority task. One of the mechanisms that contributes to the establishment and implementation of financial discipline is also a function of credit bureaus or Central Registry of Credits as an important determinant of business decisions. However, it remains a fact that the government's conscious need for a mechanism such as a Central Registry of Credits and it is one of the fastest, most effective way to introduction of financial discipline. The aim of this paper is to analyze qualitative data from banks interviews to assess financial system safety-net in Bosnia and Herzegovina and measured the following six main features: The effects of bank membership in the program of deposit insurance to increase savings, the changes in the household, company, public sector savings rate since 2002, frequency of use of information in a borrower's credit history from a Central Registry of Credits, features that reduced the adverse impact of nonperforming loans on banks' balance sheets, effects of establishing a Central Registry of Credits in Bosnia and Herzegovina on certain trends in the domestic banking, and comparison of quality of information from a Central Registry of Credits 2010 and 2006. The paper is divided into five chapters. Section 2 deals with the literature review. Section 3 contains an explanation of the Research Methodology. The findings and discussion were presented in section 4 while paper end with conclusions in section 5. The results presented here imply the significant progress made by establishing a Central Registry of Credits in Bosnia and Herzegovina on certain trends in the domestic banking and the approximation of banking sector in Bosnia and Herzegovina to the developed countries.