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2014, vol. 43, iss. 4, pp. 56-93
Commercial banking in the conditions of deregulation vs. reregulation
Dzemal Bijedic University, Faculty of Economy, Mostar, Federation of B&H
Keywords: commercial banking; banking deregulation; banking reregulation; Basel III; systemically important banks
This paper examines contemporary trends in commercial banking, confronting the stages of deregulation and reregulation in this field triggered by the global mortgage crisis. Under deregulatory conditions the competitive position of banks has toughened, and they reacted to it by intensifying: marketization, i.e. globalization, concentration, securitization and conglomeration, and by turning to the profit-oriented risk management of their activity. The contraction of their interest margin was thus neutralized by the reduction of operational costs and loss provisions, and by an increase in non-interest revenues, thereby maintaining banking profitability. The recent crisis has pinpointed the necessity of firmer regulation or reregulation of the banking sector, aimed at reducing its systemic risk, the most important aspect of which being the stricter international banking capital and liquidity standards, along with the requirement to adequately treat systemically important banks. Reregulation should strengthen capitalization and liquidity; mitigate the volume, concentration, internationalization and business dispersion, hence improving the supervision of the banking sector, implying its lower, yet more stable profitability. Such an impact of the adopted section of targeted regulatory measures has been indicated by higher liquidity, lower globalization, slower concentration and securitization, and stabilization-oriented risk management activities of today's banks. Their growth and profitability have shrunk.
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article language: Bosnian, English
document type: Original Scientific Paper
DOI: 10.5937/bankarstvo1404056Z
published in SCIndeks: 28/05/2015

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