In this work, which is named ''Characteristics of the Croatian banking system'', author tries an to investigate the way the system functions, and the strengths and weaknesses of the system through an analysis of the situation in Croatian banks since the independence of the Republic of Croatiatill today. Each country's financial system is defined by financial markets and institutions. Financial markets would be dysfunctional without intermediaries transferring funds from savers with surplus funds to those who borrow money. The banking system is part of the financial system and has an important impact on the functioning of the economy as a whole. The central financial institution in the Republic of Croatia is the Croatian National Bank. Whole Croatian banking system isunder it'sresponsibility: 20 commercial banks, 3 housing savings banks and the Croatian Bank for Reconstruction and Development. Since independence, the Croatian banking system has undergone a number of changes and reforms, as well as the global economic crisis, whose consequences are still being felt. The current situation indicates a positive direction of the banking system. Croatia has one of the highest capital adequacy rates in Europe, the share of non-performing loans is constantly decreasing and the number of foreign banks is decreasing. Although banks have historically low interest rates, their profits are increasing.