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Bank Supervision Russian style: Rules versus Enforcement and Tacit Objectives

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  • Sophie Claeys,
  • Gleb Lanine
  • Koen Schoors

    ()

Abstract

We focus on the conflict between two central bank objectives, namely individual bank stability and systemic stability. We study the licensing policy of the Central Bank of Russia (CBR) in 1999-2002. Banks in poorly banked regions, banks that are too big to be disciplined adequately and banks that are active on the interbank market enjoy protection from license withdrawal, showing a tacit concern for systemic stability. The CBR is also reluctant to withdraw licenses from banks that violate the individuals’ deposits to capital ratio, because this conflicts with the tacit CBR objective to secure depositor trust and systemic stability.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number wp778.

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Length: pages
Date of creation: 01 Jun 2005
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Handle: RePEc:wdi:papers:2005-778

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Keywords: Bank supervision; bank crisis; Russia.;

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