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The macroeconomic and institutional determinants of the profit efficiency frontier for Russian banks

Author

Listed:
  • Belousova, Veronika

    (National Research University Higher School of Economics, Moscow)

  • Karminsky, Alexander

    (National Research University Higher School of Economics, Moscow)

  • Kozyr, Ilya

    (Fraud Investigations and Dispute Services, EY Russia, Moscow)

Abstract

This paper investigates how institutional and macroeconomic factors influence the profit efficiency frontier of Russian banks. We demonstrate that the macroeconomic environment is crucial for constructing the profit frontier. The cargo transportation index, exchange rate, and intermediation ratio have a positive relationship with this efficiency frontier while the share of loan loss provision in the loan portfolio is negatively associated with it. In addition, we find that such institutional determinants as a bank’s location, branch network diversity, and ownership type matter for constructing this frontier.

Suggested Citation

  • Belousova, Veronika & Karminsky, Alexander & Kozyr, Ilya, 2018. "The macroeconomic and institutional determinants of the profit efficiency frontier for Russian banks," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 49, pages 91-114.
    • Handle: RePEc:ris:apltrx:0339
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    More about this item

    Keywords

    bank; profit efficiency frontier; macroeconomic factors; institutional factors; Russia;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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