BOSNIA AND HERZEGOVINA’S BANKING SECTOR, DYNAMICS OF ITS PROFITABILITY COMPONENTS
Journal Title: Acta Economica - Year 2008, Vol 6, Issue 8
Abstract
Period from 2000 to 2005 saw a significant change in profitability of Bosnia and Herzegovina’s banking sector and its components. Indicator of operational efficiency, return on income (ROI) takes positive value for the first time in 2003. Parallel to gradual increase in operational efficency, asset utilization efficiency is deacreasing. In 2005 asset utilization is for 42% lower compared with 2000 year’s level and it amounts to 0,09. Most important determinant of return on asset’s growth is operational efficiancy’s growth which eliminates drop in asset utilization. In 2005 return on asset is 0,89%. In period 2000–2005 equity multiplier increased for 116%. At the end of 2005 there are 10,90 units of asset which stand against one unit of equity. Return of asset’s growth and multiplier increasing lead to big change in return on equity. In 2000 ROA was -8,29% and in 2005 is 9,69%. Resources for the further growth should be sought at the first place in prevention of decrease in asset utilization efficency and in its gradul growth as well as in aditional growth of operational efficency. Too much emphasis on leverage i. e. further growth of multiplier could lead to growth of systematic risk. In the scenario of loss high leverage transforms itself in negative return on equity. The best approximation of the long term development tendency of equity mulitiplier is linear trend according to which the multiplier’s value in 2008 should be 14,30.
Authors and Affiliations
Драган С. Јовић, M. Sc.
Keywords
Related Articles
- EP ID EP43636
- DOI -
- Views 294
- Downloads 0
http://ae.ef.unibl.org/index.php/AE/article/view/18/13
Unlike competitive markets with theoretically infinite number of agents whose decisions merge into a large mass of other agents’ decisions, forming prices as allocation parameters controlled by no one, international aren...
Leaden legs of recovery of Republic of Srpska economy
This paper , on the base of historical facts, tries to warn the business decision makers on the need to examine the global limiting factors that significantly affect the recovery and development of the economy of any coun...
TAX INCENTIVES FROM INCOME TAXES IN ATTRACTING FOREIGN INVESTMENT IN SERBIA
The aim of this paper is to point out the tax incentives from the tax, which are often used in the transition countries, especially in Serbia, for attracting foreign investment. The paper analyzes the theoretical aspect...
Appraisal of financial indicators average values in joint-stock companies of Republic of Srpska
On the basis of sample composed of 593 joint-stock companies, and for 99 % confidence level we have estimated financial indicator average values for these group of enterprises. Profitability, asset efficiency and asse...
FISCAL POLICY IN TERMS OF GLOBAL ECONOMIC CRISIS AND ITS IMPACT ON MACROECONOMIC AGGREGATES IN BOSNIA AND HERZEGOVINA
One of the biggest challenges for various theoreticians and practitians worldwide in the last few years has been the current economic crisis. They are faced with a challanging and resposible task of creating measures of...