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Russia's banking sector transition: Where to?

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Abstract

This paper applies an analytical paradigm of institutional economics to the transition of the Russian banking sector, focusing on the interplay between ownership change and institutional change. We find that the state’s withdrawal from commercial banking has been inconsistent and limited in scope. To this day, core banks have yet to be privatized and the state has made a comeback as owner of the dominant market participants. We also look at the new institutions imported into Russia to regulate banking and finance, including rule of law, competition, deposit insurance, bankruptcy, and corporate governance. The unfortunate combination of this new institutional overlay and traditional local norms of behavior have brought Russia to an impasse – the banking sector’s ownership structure hinders further advancement of market institutions. Indeed, we may now be witnessing is a retreat from the original market.

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File URL: http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/dp0507.pdf
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Bibliographic Info

Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 5/2007.

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Length: 34 pages
Date of creation: 07 Mar 2007
Date of revision:
Handle: RePEc:hhs:bofitp:2007_005

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Postal: Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland
Phone: + 358 10 831 2268
Fax: + 358 10 831 2294
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Web page: http://www.suomenpankki.fi/bofit_en/
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Keywords: banking sector reform; privatization; Russia; economic transition; institutional economics;

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References

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  1. Grigorian, David A. & Manole, Vlad, 2002. "Determinants of commercial bank performance in transition - an application of data envelopment analysis," Policy Research Working Paper Series 2850, The World Bank.
  2. Koivu, Tuuli, 2002. "Do efficient banking sectors accelerate economic growth in transition countries," BOFIT Discussion Papers 14/2002, Bank of Finland, Institute for Economies in Transition.
  3. Drakos, Kostas, 2003. "Assessing the success of reform in transition banking 10 years later: an interest margins analysis," Journal of Policy Modeling, Elsevier, vol. 25(3), pages 309-317, April.
  4. Hasan, Iftekhar & Marton, Katherin, 2003. "Development and efficiency of the banking sector in a transitional economy: Hungarian experience," Journal of Banking & Finance, Elsevier, vol. 27(12), pages 2249-2271, December.
  5. Polterovich, Victor, 2001. "Трансплантация Экономических Институтов
    [Transplantation of Economic Institutions]
    ," MPRA Paper 22034, University Library of Munich, Germany.
  6. Bonin, John P. & Hasan, Iftekhar & Wachtel, Paul, 2005. "Bank performance, efficiency and ownership in transition countries," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 31-53, January.
  7. Laurent Weill, 2003. "Banking efficiency in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 569-592, 09.
  8. Tuuli Koivu, 2002. "Do efficient banking sectors accelerate economic growth in transition countries?," Macroeconomics 0212013, EconWPA.
  9. Steven Fries & Anita Taci, 2004. "Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries," Working Papers 86, European Bank for Reconstruction and Development, Office of the Chief Economist.
  10. A. Yakovlev., 2003. "Demand for Law in the Sphere of Corporate Governance: Evolution of Economic Actors' Strategies," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 4.
  11. Greif, Avner, 1994. "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 912-50, October.
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Citations

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Cited by:
  1. Kirdina, Svetlana & Vernikov, Andrei, 2010. "Эволюция Банков В Х- И Y-Экономиках
    [Evolution of banks in economies of X-type and Y-type]
    ," MPRA Paper 23009, University Library of Munich, Germany.
  2. Vernikov, Andrei, 2010. "Direct and indirect state ownership on banks in Russia," MPRA Paper 21373, University Library of Munich, Germany.
  3. Vernikov, Andrei, 2009. "Доля Государственного Участия В Банковской Системе России
    [Market share of state-controlled banks in Russia]
    ," MPRA Paper 43449, University Library of Munich, Germany, revised Dec 2012.
  4. Fungacova, Zuzana & Solanko, Laura, 2008. "Risk-taking by Russian banks: Do location, ownership and size matter?," BOFIT Discussion Papers 21/2008, Bank of Finland, Institute for Economies in Transition.
  5. Glushkova, Ekaterina & Vernikov, Andrei, 2009. "How big is the visible hand of the state in the Russian banking industry?," MPRA Paper 15563, University Library of Munich, Germany.
  6. Weill, Laurent, 2011. "How corruption affects bank lending in Russia," Economic Systems, Elsevier, vol. 35(2), pages 230-243, June.
  7. Berger, Allen N. & Hasan, Iftekhar & Korhonen, Iikka & Zhou, Mingming, 2010. "Does diversification increase or decrease bank risk and performance? Evidence on diversification and the risk-return tradeoff in banking," BOFIT Discussion Papers 9/2010, Bank of Finland, Institute for Economies in Transition.
  8. Sprenger, C., 2010. "State Ownership in the Russian Economy. Part 1. Its Magnitude And Sectoral Distribution," Journal of the New Economic Association, New Economic Association, issue 6, pages 120-140.

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