Тhe aim of this paper is to research if the application of the concept of fair value in bank sector of Bosnia and Herzegovina contributes to procyclical leverage. Leverage is defined as ratio between total asset and equity. The procyclical leverage is tested by using two econometric panel models in way that in the first model as independent variable we used total asset, while in the second one we used total asset changes both which are and those that are not affected by the concept of fair value. The analysis showed that procyclical leverage is not affected by the fair value concept.

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