DETERMINANTS OF INTEREST RATES IN BOSNIA AND HERZEGOVINA
DETERMINANTS OF INTEREST RATES IN BOSNIA AND HERZEGOVINA

Summary/Abstract: The financial system has the major function of intermediation between saving of depositors and investment of borrowers and in this regard interest incomes are major source of income for traditional banks. Net interest margin is a measure of the difference between the weighted average of yields on interest revenue and interest expense and represents a bank’s ability to set the price of loans above interest expenses. NIM measures bank efficiency in performance of the traditional activity of collecting deposits and granting loans. The purpose of this papre is examining the determinants of the net interest margin for the B&H banks and in order to achieve it there were set the hypothesis that different factors like change EURIBOR rate, GDP growth rate, Inflation rate, Total loan portfolio – Legal entities, Equity to total assets ratio, Non-Performing Loans (NPL), Loan to Deposit Ratio (LDR), Unemployment rate will have significant influence on Average gross salary.

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