The banking sector stability is, beside other factors, influenced by the implementation of the banking sector supervision. The aim of the research is to find out the connection between the the Republic of Srpska’s banking sector and other segments of the Republic of Srpska’s financial sector, and other banking sectors in the region,which stems the need of cooperation of the banking sector supervisory authority with other supervisory authorities, institutions and bodies. Also, taking in account that in the beginning of 2017 new relevant laws regulating bank operation and supervision entered into force, based on the analysis of the banking sector parameters and provisions of new laws it will be assessed whether, in the implementation period of the new legal framework, parameters of the whole banking sector have been improved, as well as supervisory authority competencies. Having in mind the integration process of the Republic of Srpska and Bosnia and Herzegovina into European Union, it will be examined to what extent is the legal framework regulating banks in concordance with the relevant source of European Union law.
Results of the analysis show that there are different channels of connection between the the Republic of Srpska’s banking sector and other segments of the Republic of Srpska’s financial system. In the implementation period of the new legislation regulating banks, which is to a great extent in concordance with secondary sources of European Union law, banking sector parameters and competencies of the banking sector supervisory authority have been improved.