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Russian banking: a comeback of the state

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  • Andrei Vernikov

Abstract

The purpose of this paper is to assess the size of public sector within the Russian banking industry. We identify and classify at least 78 state-influenced banks. We distinguish between banks that are majority-owned by federal executive authorities or Central Bank of Russia, by sub-federal (regional and municipal) authorities, by state-owned enterprises and banks, and by "state corporations". We estimate their combined market share to have reached 56% of total assets by July 1, 2009. Banks indirectly owned by public capital are the fastest-growing group. Concentration is increasing within the public sector of the industry, with the top five state-controlled banking groups in possession of over 49% of assets. We observe a crowding out and erosion of domestic private capital, whose market share is shrinking from year to year. Several of the largest state-owned banks now constitute a de facto intermediate tier at the core of the banking system. We argue that the direction of ownership change in Russian banking is different from that in CEE countries.

Suggested Citation

  • Andrei Vernikov, 2010. "Russian banking: a comeback of the state," UCL SSEES Economics and Business working paper series 104, UCL School of Slavonic and East European Studies (SSEES).
    • Handle: RePEc:see:wpaper:104
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    References listed on IDEAS

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    1. A. Karas & K. Schoors & L. Weill, 2008. "Are private banks more efficient than public banks? Evidence from Russia," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 08/519, Ghent University, Faculty of Economics and Business Administration.
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    4. Vernikov, Andrei V., 2007. "Russia' banking sector transition: Where to?," BOFIT Discussion Papers 5/2007, Bank of Finland Institute for Emerging Economies (BOFIT).
    5. Randall Morck & Lloyd Steier, 2005. "The Global History of Corporate Governance: An Introduction," NBER Chapters, in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 1-64, National Bureau of Economic Research, Inc.
    6. Glushkova, Ekaterina & Vernikov, Andrei, 2009. "How big is the visible hand of the state in the Russian banking industry?," MPRA Paper 15563, University Library of Munich, Germany.
    7. Vernikov, Andrei, 2009. "Russian banking: The state makes a comeback?," BOFIT Discussion Papers 24/2009, Bank of Finland Institute for Emerging Economies (BOFIT).
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    Cited by:

    1. Richard Connolly, 2012. "The Determinants of the Economic Crisis in Post-Socialist Europe," Europe-Asia Studies, Taylor & Francis Journals, vol. 64(1), pages 35-67.

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance

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