Development of Serbian banking Sector: a Comparision With the Western Balkan Countries

Serbian banking sector in last decade faces rapid expansion followed by capacity, productivity and profitability increases. Foreign direct investments inflow, strenghtening of depository and capital basis, rapid credit activity expansion, decreasing number of banks and more efficient management are the main characteristics of domestic banking after performed financial system regulatory reform. Powerfull strikes of economic crises on domestic banking sector and high reputational risk in previous period required active role of central bank that is, by set of measures, maintained sector stability. Considering turbulent environment domestic banks operate and risks they face, this paper analyze sector performances with simultaneous comparison with relevant indicators in Western Balkan and EU countries. Comprehensive analysis is performed to present current domestic banking sector conditions and evaluate potential directions of future development.