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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, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 40(4), pages 106-128.
  • Handle: RePEc:ris:apltrx:0280
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    References listed on IDEAS

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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;
    All these keywords.

    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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