BUSINESS QUALITY INDICATORS OF DOMESTIC BANKSНово Плакаловић Бошко Мекињић |
Published 10/31/2018 |
ABSTRACT
In this article we show how clients can get a good picture of the quality of individual banks. We show that by direct insight into the publicly published financial reports of banks, using the financial ratios , a lot of reliable quality grades of individual banks can be formed. This is complemented with data from external auditors' reports. A serious financial analysis of historical data as well as a continuous ongoing careful monitoring of available information sources can, with a high degree of certainty, point to potential problems in the bank and warn them on time that the bank might be faced with serious problems in due course. We conclude that not only data from the bank reports and audit reports are always sufficient. It is also desirable to follow all other available information. Which bank will the clients choose and by what criterion is an individual choice because it depends on the client's business position, ability to analyze, and the ability to be sufficiently informed. We conclude that the problem of information asymmetry is present not only in relation to lenders and loan users, but also in the relationship between the borower and his bank.
Keywords: bank performance analysis, early warning systems, banks' risk of collapse.