Direct and indirect state ownership on banks in Russia
AbstractThis paper uses the banking industry case to show that the boundaries of public property in Russia are blurred. A messy state withdrawal in 1990s left publicly funded assets beyond direct reach of official state bodies. While we identify no less than 50 state-owned banks in a broad sense, the federal government and regional authorities directly control just 4 and 12 institutions, respectively. 31 banks are indirectly state-owned, and their combined share of state-owned banks’ total assets grew from 11% to over a quarter between 2001 and 2010. The state continues to bear financial responsibility for indirectly owned banks, while it does not benefit properly from their activity through dividends nor capitalization nor policy lending. Such banks tend to act as quasi private institutions with weak corporate governance. Influential insiders (top-managers, current and former civil servants) and cronies extract their rent from control over financial flows and occasional appropriation of parts of bank equity.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 21373.
Date of creation: Mar 2010
Date of revision:
Russian banks; state; government; public sector; state-owned banks; state-controlled banks;
Find related papers by JEL classification:
- P43 - Economic Systems - - Other Economic Systems - - - Finance; Public Finance
- P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-28 (All new papers)
- NEP-BAN-2010-03-28 (Banking)
- NEP-CIS-2010-03-28 (Confederation of Independent States)
- NEP-TRA-2010-03-28 (Transition Economics)
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