Distorted Incentives Fading?

The present study attempts to trace and analyze the development of the Russian banking sector since the final years of Soviet rule. It deals with legal foundations, banking supervision, banks major sources of assets, liabilities, earnings and related changes, bank restructuring, rehabilitation programs, the roll of foreign credit institutions and FDI. For many years prevailing conditions and incentives have favored; speculative and short-term activities, but have not allowed banks to carry out effective financial intermediation in Russia. After the financial collapse of August 1998 sluggish post-crisis restructuring ensued . The banking sector only recovered on the back of the general economic recovery, buoyed by the ruble devaluation, the oil price boom, political stability and some first fruits of structural reforms. A credit boom unfolded, giving rise to new risks. Most recently, the authorities have undertaken impressive efforts to intensify reforms. If implementation follows up, Russia will have put itself on the catching-up lane with other transition countries that are further advanced in banking reforms.;;;;;;