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Deposit Insurance, Banking Reform, and Financial Sector Development in Several Nations of Southeastern Europe

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  • Neil B. Murphy

Abstract

Deposit insurance has spread to many sections of the world. In the newly formed nations of the former Yugoslavia, this has occurred under conditions of post‐conflict reconstruction, hyperinflation, and several different governmental structures. Three cases are examined; Bosnia and Herzegovina, Croatia, and Serbia and Montenegro. They all have developed deposit insurance programs. The implementation process was compared to “best practice” recommendations. It is found that the situation in Bosnia and Herzegovina was difficult due to the fractured nature of the Dayton Accord government structure on the one hand but easier to the strong international presence supporting required actions. In the case of Croatia, a unified state emerged from the war, but it was somewhat isolated. Its bank restructuring was costly, and a fragmented deposit insurance program was introduced in the middle of a banking crisis. In the case of Serbia and Montenegro, the bank restructuring process is still underway, and implementation of a functioning deposit insurance program properly awaits its completion.

Suggested Citation

  • Neil B. Murphy, 2006. "Deposit Insurance, Banking Reform, and Financial Sector Development in Several Nations of Southeastern Europe," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 15(1), pages 1-55, February.
    • Handle: RePEc:wly:finmar:v:15:y:2006:i:1:p:1-55
    DOI: 10.1111/j.0963-8008.2006.00113.x
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