IS IT POSSIBLE TO IMPROVE BANK PERFORMANCE: EVIDENCE FROM BANKS IN BOSNIA AND HERZEGOVINA? IS IT POSSIBLE TO IMPROVE BANK PERFORMANCE: EVIDENCE FROM BANKS IN BOSNIA AND HERZEGOVINA?

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Almir Alihodžić
Ilma Dedic Grabus

Abstract

This research was conducted to identify variables that affect the efficiency of banks in Bosnia and Herzegovina. The required data were collected from 30 respondents (banks directors and CEOs) and a targeted set of 20 questions. For the purposes of data analysis, the statistical technique of factor analysis was used with the help of principal components. In the process of implementing this technique, the general applicability of the model and each variable was tested in order to identify key indicators that affect the efficiency of bank operations. Therefore, the main objective of this research is to identify the factors that most affect the efficiency of banks in Bosnia and Herzegovina. The results of the research showed that the value of the Kaiser-Meyer-Olkin (KMO) is greater than 0.50, which certainly confirms the application of factor analysis, that is, the significance of certain variables on the efficiency and effectiveness of banks in Bosnia and Herzegovina. Also, the factor rotation matrix indicates that the following variables have the greatest impact on the efficiency and effectiveness of banks operations: the bank provides fast service (q8), the banks communication with clients is good (q9), to meet when granting loans (q19), banks provide different types of loans (q14) and banks offer moderate interest rates on credit placements (q15).

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