PERSPECTIVES OF THE FINANCIAL STABILITY PROTECTION AND BANKING RISK PREVENTION

Abstract

The deposit insurance system is the backbone of the
protective mechanism of the financial security network, which enables
the prevention of a "stampede" of depositors on banks in order to
prevent a negative effect on the stability of the financial system.
Therefore, especially in the event of a crisis, such as the pandemic
caused by COVID-19, the protection of financial stability and
depositors emphasizes the importance and role of efficient
organization of the deposit insurance system. The paper starts from
the analysis of the concept of a financial security network in order to
create a relevant basis for modeling the directions of development of
the system of financial stability protection and risk prevention of
banking operations. The aim of the paper is to conduct a research into
the theoretical and empirical findings in order to identify the potential
for a more effective deposit insurance system in the Republic of
Serbia. An efficient deposit insurance system in the Republic of Serbia
should provide support and protection for depositors, most of whom
do not possess the necessary knowledge which can help them assess
banking risks, i.e. risks of financial failure and crisis. The
development of our deposit insurance system should be aimed at
strengthening the stability of the financial system and banking
operations, i.e. its resilience to crisis disturbances on the market.