Milena Jakšić

BANK REGULATIONS IN MODERN FINANCIAL ENVIRONMENT

The paper analyzes the role and importance of bank regulations in ensuring safe and stable banking operations. Modern business environment in which banks operate is unstable, turbulent, and quite unpredictable. Unlike traditional business conditions, banks are now exposed to growing and diverse risks, as well as frequent crisis situations. Accordingly, control over banking operations is becoming a necessity. The need for regulation can be justified by the fact that the market, left to itself, cannot remain competitive in the long term. To fulfill their goals, regulations must constantly adapt to changes in the environment. The aim of the paper is to point to the necessity of regulatory changes in the banking sector. By critical review of certain regulatory changes, the authors conclude that they significantly contribute to safer banking operations and system stability.

Fuzzy Approach in Ranking of Banks according to Financial Performances

Evaluating bank performance on a yearly basis and making comparison among banks in certain time intervals provide an insight into general financial state of banks and their relative position with respect to the environment (creditors, investors, and stakeholders). The aim of this study is to propose a new fuzzy multicriteria model to evaluate banks respecting relative importance of financial performances and their values. The relative importance of each pair of financial performance groups is assessed linguistic expressions which are modeled by triangular fuzzy numbers. Fuzzy Analytic Hierarchical Process (FAHP) is applied to determine relative weights of the financial performances. In order to rank the treated banks, new model based on Fuzzy Technique for Order Performance by Similarity to Ideal Solution (FTOPSIS) is deployed. The proposed model is illustrated by an example giving real life data from 12 banks having 80% share of the Serbian market. In order to verify the proposed FTOPSIS different measures of separation are used. The presented solution enables the ranking of banks, gives an insight of bank’s state to stakeholders, and provides base for successful improvement in a field of strategy quality in bank business.

Redefining the Role of Banking Regulation in the Banking Sector of European Union

Abstract During the last two decades there have been significant changes in the structure of the banking sector at the European level. Factors such as globalization, integration and development of information technologies had a significant impact on these changes. In terms of the economic integration of Europe and structural changes, there is a need to redefine the regulatory infrastructure, due to inadequate institutional arrangements. The problem topics about reform of banking regulation and establishment of a banking union, as a new level of economic integration of Europe, has been put in the focus of interest during the global financial crisis. For this reason, the paper attempts to give a comprehensive analysis of the reasons and ways to reform regulation of the banking sector. Using a critical review of the implemented reforms of banking regulation at the national and supranational level will be reconsidered their applicability in specific problem situations and suggest measures for further improvement.