FINANCIAL CRISIS AND ITS IMPACT ON BANKING AND REAL SECTOR IN BOSNIA AND HERZEGOVINA

Abstract

This paper analyzes the impact of the financial crisis on the real sector in BiH in 2009. The world financial crisis arrived in South Eastern Europe with a delay, but its consequences are so much bigger. To what degree a country is affected by crisis depends on the degree of its integration. We can conclude that the consequences of the crisis are mitigated by the European Union funds which in the meantime increased from the 120 million euros of initial credit support to 165 million euros. It is worrying that the negative effects of financial crises are not dangerous only for economic, but also for political stability, especially in Bosnia and Herzegovina and other countries of the Western Balkans. The difficult situation in which BiH is now is even more painful if we take into account that after severe conflicts during the nineties of the last century, the recent years recorded a steady economic recovery with a stable growth rate. The paper documents and interprets the current situation in the banking and real sector on the one hand, while on the other hand, it seeks to provide adequate guidance for getting out of the recession under which BiH economy is now.