Moral hazard in the banking sector of Republika Srpska

Abstract

Many previous crisis in the banking sector showed that moral hazard is often one of the main causes of such crises. Failure of two banks in Republika Srpska in a very short period of time gave rise to this study to determine whether in the banking sector of Republika Srpska there is an in?uence of moral hazard and in what forms. Confirmation of moral hazard e?ects by both the insured bank depositors and by the lower rated banks in the banking sector and the negative impact of moral hazard e?ects on the level of interest rates, but also on the quality of the banking sector have opened up the space for further research. They refer to the possible e?ects of proving moral hazard as a cause of bank failures in the banking sector of Republika Srpska, as well as establishing safeguard mechanisms for hazardous behaviour of all participants in the banking sector of Republika Srpska, including banking regulators.