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In the past decade the world faced the consequences of the global economic crisis proclaimed in 2008. The common case for everyone was a financial crisis in which every country bore the burden of the crisis in its own way, and in each country generators of the crisis appeared in different segments. In the 1980s American economist Hyman P. Minsky wrote about this topic, explaining the characteristics of financial crises in rigid financial systems. The aim of this paper is to understand the causes and the consequences of the crisis through creation, growth and bursting of the credit bubble in separate market segments in Bosnia and Herzegovina through the system of currency board. Through the application of vector autoregression model (VAR) the responses to shocks, recorded on the side of demand for loans which were generated in the capital markets and in the construction sector, and the credit shock of demand, which formed, developed and then exploded after the proclamation of the global economic crisis in Bosnia and Herzegovina, were analyzed. Interpretation of the results through the light of hypothesis of Minsky moment is corroborated by an additional fact that a rigid monetary system like currency board did not provide the necessary mechanisms for the maintenance of financial stability. Stability of the financial system of Bosnia and Herzegovina was saved exclusively by the will of parent banks from abroad whose daughters participate in the financial system of Bosnia and Herzegovina.

Non-financial sector in B&H and the companies due to lack of its own funds for sustainable growth rely on financing its operations through bank loans. The dominant share of lending to banks in B&H is directed to the household sector while on the other hand the approval of bank loans to enterprises is on a smaller scale. Corporate sector due to underdeveloped capital markets is not able to borrow through the issuance of equity and debt securities. The main objective of this study is to determine which independent variables in the regression models have an impact on the amount of approved loans granted by banks to non-financial sector, i.e. companies. The loans growth rate will be observed as a dependent variable, and the growth rate of non-performing loans, the growth rate of operating costs, real GDP growth, consumer price index, deposit growth rate, deposit interest rate, interest rate (EURIBOR), and interest rate (LIBOR) will be used as independent variables.

In this paper, the subject of analysis is influence of certain macroeconomic and microeconomic variables on bank net interest margins in Bosnia and Herzegovina (BH) for the period from 2008 to 2013 through a multiple linear regression models. The level and dynamics of NIM indicate the efficiency of financial intermediation. The observed period is characterized by the reduction in net interest margins of banks over the previous decade, which was characterized by high GDP growth, bank loans and high-interest rates and high profitability. Therefore, this study examines the factors that affect the level of net interest margins in the domestic banking industry. The main objective of this paper is to determine whether there is interdependence in the movement between the independent and dependent variables through a multiple linear regression. The net interest margin will be observed as a dependent variable, and liquidity risk, operating costs, credit risk, the index of market concentration, funding risk, the growth rate of gross domestic product and consumer price index will be used as independent variables.

The article is on the system of the safety network of the financial sector in Bosnia and Herzegovina (BH) and potential causes of possible financial instability. The network of protection of financial institutions in BH is to a certain extent incomplete but a high level of regulatory and supervisory activities has been present so far, which effects the expressed stability of financial institutions. Potential risks and the vulnerability of the financial system arise from a range of features which are characteristic of the local financial institutions, their activities, the condition of the BH economy, and macroeconomic stability and flows of goods and capital between the country and foreign countries. The sector of financial institutions has been privatized and it is in foreign ownership. Foreign exposure of domestic economy and financial markets is limited to only a small number of countries (Austria, Germany). There are pressures in respect of the increased rates of return on bank capital and there is a very high dynamic of credit growth. Possible unfavourable scenarios could bring about problems in the banking sector, which is shown by stress tests. The deterioration of the macroeconomic imbalance could also be a significant cause of serious problems in the local financial sector. There are no certain indicators that this could happen in the near future and influence the appearance of a financial crisis; however, such a situation cannot be ruled out.

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The subject and purpose of the research in this paper is based on the analysis of the influence of the central bank on public debt in the conditions of the currency board in Bosnia and Herzegovina. The structure of the work was set up through a dynamic analysis of the ratio of public debt variables, the supply of money, the state of the budget of the governments of Bosnia and Herzegovina, the current account and the nominal exchange rate. The research covers the period from 2000 to 2016. The research methodology is based on the use of empirical data and the application of the vector autoregresion model (VAR). On the basis of an analysis of the function of impulse and response, it is possible to indicate the reactions of the variable variables with one another. On the other hand, the decomposition of variance through the model proves the mutual variability and interaction of the variables for the observed period of research. The practical implications of the work are reflected in the answer to the extent to which monetary' authorities, in the conditions of the currency board, due to the endogenous supply of money, contribute to the creation of a budget deficit and public debt. [ABSTRACT FROM AUTHOR]

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Copyright of BH Economics Forum / BH Ekonomski Forum is the property of University of Zenica, Faculty of Economics and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The paper deals with the current financial and economic crisis. The crisis spilled over from developed countries on the periphery and on Bosnia and Herzegovina economy. Given the extent of financial and economic crisis, the question is whether the ruling economic paradigm led to a crisis and whether it is necessary to review it. States' response to the crisis is expected. Governments have invested huge financial resources in order to save important financial institutions. Regulation of financial institutions is significantly changed and adopted a new set of rules-Basel III. The aim is to triple capital requirements until 2019 and to strengthen monitoring of bank liquidity. Crucial assistance in mitigating the effects of the crisis to developing countries and transition economies was provided by IMF with considerably increased financial potential. In its programs of assistance IMF has retained its economic doctrine. Countries are allowed some flexibility and discretion in the selection of certain instruments of economic policies and IMF has not insisted so much on structural reforms so far. The academics reinforced the neo-liberal critique of the concept but do not offer new models. Emphasis is placed on the irrational behavior of economic actors as opposed to initial assumptions of neoclassical theory that all economic participants are rational. The occurrence of the crisis denied such a setting. It is necessary to further review the ruling economic paradigm. [ABSTRACT FROM AUTHOR]

The current financial crisis has also actualised the work and ideas of the American economist Hymen P. Minsky. In his time almost unknown in America for many years after his death, he has been often mentioned in the academic world and the general public. Now many refer to him because in his work he had practically envisioned the occurrence of large financial and economic crisis that we were struck by. Minsky was a Keynesian and he was ignored because of his ideas that essentially differed from the dominant schools of economic thought. His analysis focuses on the mode of financing the economy and the formation of asset price bubbles, which inevitably leads to bubble explosion, losses and recession. Minsky emphasizes the role of bank credit, which is the "rocket fuel" for prices growth and creation of excessive optimistic expectations and euphoria in some asset markets. The euphoria is logically followed by the bubble explosion, ("Minsky moment"), a drastic drop in asset prices, a sudden reduction in credit ("Minsky meltdown") and collapse. In this context, Minsky talks about the inherent instability of capitalism and presents "a financial instability hypothesis." However, Minsky believes in capitalism, but not in the wild and unbridled capitalism of new liberals, rather in democratic, regulated, based on New Deal, with institutional financial arrangements governing the financial sector and preventing the bubble creation and the crisis. Minsky argues for more equitable distribution of incomes in the U.S. and greater social role of the state. Minsky expanded the boundaries of discipline because he focused on the structural, social and political issues. Modern financial economic crisis, like many previous crises, took place exactly according to the formula which Minsky had precisely formulated. Even the bubbles that occurred in Bosnia and Herzegovina (stock market and real estate market) followed by credit expansion had its course precisely following the Minsky formula. [ABSTRACT FROM AUTHOR]