Competition in Russia’s Banking Sector Prior to and After Supervision Policy Enhancement: Conclusions Based on Interest Rate Dispersion and Spread

Using the example of Russia, we argue that financialisation in an authoritarian state can take place primarily through formation in financial sector monopoly-like state-related structures controlled by a limited circle of the irreplaceable elite. It occurs because financialisation and new financial technologies in an authoritarian state increase both the opportunities and incentives for dominance of large state-dependent institutions in the financial sector. The authoritarian state and its elite are using financial and information technology developments in accordance with their goals, adopting and enhancing some financial practices and innovations from the experience of developed countries while rejecting, distorting or slowing down others. As a result, on the one hand, within the framework of the formation of such monopoly-like institutions, financialisation is proceeding actively, the role of finance and financial relations in society is increasing everywhere and the use of new financial technologies, digitalisation and financial inclusion are expanding. On the other hand, some financial markets remain underdeveloped because either they imply a certain degree of competition, diversity, institutional quality and independence from state voluntarism, or the state and authoritarian elite have not yet fully elaborated a strategy of integrating these financial markets into the orbit of their interests. Thus financialisation in DEEs with an authoritarian political regime can strengthen and facilitate the dominance of authoritarian elites. We draw these conclusions considering the example of financialisation in Russia in the last two decades, where the banking sector is at the core of the financial system.

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Transformation of the Structure of the Russian Banking Sector: The Impact on Regional Development

Fiapshev

Travkina

Poznyakov

2020

Engineering Technologies and Systems

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Introduction. Inconsistency of the governmental regulatory impact on the socio-economic processes is one of the destructive factors in the increasing asymmetry of regional development. The decisions taken in the sphere of financial market regulation have provoked large-scale structural and quantitative changes in the banking system. The purpose of this study is to assess the impact of the occurred transformation on regional development and to analyze the possibilities of reducing gaps in the volume of banking services provided in Russia’s regions as well as in the level of their socio-economic development. Materials and Methods. The study was conducted on the basis of data from the Central Bank of the Russian Federation and the Federal State Statistics Service. The results of the banking system transformation and the possible impact of the changes on regional development were assessed using the methods of scientific knowledge. When working with the empirical material, the methods of comparison, measurement and evaluation were used. Results. The authors have identified gaps in the level of socio-economic development of Russia’s regions. For a long time, a number of regions have demonstrated limited opportunities for self-development and to fulfil their potential. The acuteness of this problem can be smoothed out by the tools of bank regulation (e.g. lending). After the decrease in the number of regional banks, the banking services market has seen steady signs of oligopoly with a marked decline in price competition. Negative effects of this decline have been increasing at the regional level. Discussion and Conclusion. Regional socio-economic dynamics demonstrate high sensitivity to the reduction in the number of regional banks operating independently as well as to the decline in price competition in the banking services market. It is important that the regional component be taken into account in regulatory practices, including that applicable to the banking sector. Preservation of the regional segment of this system will help to solve a lot of problems at the local level and thus make a significant contribution to overcoming the gaps in the socio-economic development of the regions. The results of this study will be useful to managers of the Central Bank of Russia, as well as to regional and local authorities.

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Competition in Russia’s Banking Sector Prior to and After Supervision Policy Enhancement: Conclusions Based on Interest Rate Dispersion and Spread

Cited by 7 publications

References 21 publications

Consumer loan rate dispersion and the role of competition: Evidence from Turkish banking industry

Consumer loan rate dispersion and the role of competition: Evidence from Turkish banking industry

Financialisation and the authoritarian state: the case of Russia

Transformation of the Structure of the Russian Banking Sector: The Impact on Regional Development

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