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The estimation of the competitiveness of SME financing programs of development banks in Russia

Author

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  • Bakaykina, Anna

    () (Russia Sustainable Financing Facility; Moscow, Russian Federation)

Abstract

This article performs the quantitative estimation of the competitiveness of small- and medium-sized enterprises’ (SME) financing programs of development banks (DB) in Russia in 2010 –2013. For these purposes, author propose an original approach based on optimization of the Lerner index (it is a share of marginal costs in interest rate) by the Lagrange multipliers for group of partner banks of each DB. The study shows that the partner banks of SME Bank and the European Bank for Reconstruction and Development (EBRD) have the highest margin. However, for some of these banks high margin is explained by low level of marginal costs, i.e. high efficiency, whereas for other banks it is associated with high interest rate on issued loans and hence low efficiency. In particular, the results of optimization show that EBRD has the most competitive SME lending program. An approach used by SME Bank leads to quite high level of marginal costs in interest rates of its partner banks in case of the reallocation of funds among the most solvent partner banks.

Suggested Citation

  • Bakaykina, Anna, 2015. "The estimation of the competitiveness of SME financing programs of development banks in Russia," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 40(4), pages 106-128.
  • Handle: RePEc:ris:apltrx:0280
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    File URL: http://pe.cemi.rssi.ru/pe_2015_4_106-128.pdf
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    References listed on IDEAS

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    1. Eduardo Levy Yeyati & Alejandro Micco & Ugo Panizza, 2004. "Should the Government Be in the Banking Business?: The Role of State-Owned and Development Banks," IDB Publications (Working Papers) 1543, Inter-American Development Bank.
    2. Kilby, Christopher, 2005. "Donor Influence in MDBs: the Case of the Asian Development Bank," Vassar College Department of Economics Working Paper Series 70, Vassar College Department of Economics.
    3. Karminsky, A. & Kostrov, A., 2013. "Modeling the Default Probabilities of Russian Banks: Extended Abillities," Journal of the New Economic Association, New Economic Association, vol. 17(1), pages 64-86.
    4. Delis, Manthos D., 2012. "Bank competition, financial reform, and institutions: The importance of being developed," Journal of Development Economics, Elsevier, vol. 97(2), pages 450-465.
    5. Zuzana Fungácová & Laura Solanko & Laurent Weill, 2010. "Market power in the russian banking industry," International Economics, CEPII research center, issue 124, pages 127-146.
    6. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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    8. Mamonov, Mikhail, 2015. "Microeconomic modification of an industry-wide Boone indicator: Market power of Russian banks revisited," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 18-44.
    9. Eduardo Levy Yeyati & Alejandro Micco & Ugo Panizza, 2004. "Should the Government Be in the Banking Business? The Role of State-Owned and Development Banks," Research Department Publications 4379, Inter-American Development Bank, Research Department.
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    11. Anatoly Peresetsky & Alexandr Karminsky & Sergei Golovan, 2011. "Probability of default models of Russian banks," Economic Change and Restructuring, Springer, vol. 44(4), pages 297-334, November.
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    More about this item

    Keywords

    banking competition; competitiveness; SME financing; development banks; optimization; method of Lagrange multipliers; Lerner index; BSTDB; EBRD; FMO; IFC; SME Bank;

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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