Academic journal article Review of European Studies

Guidelines of the Intensive Model of Development of the Banking System of Russia and the Actual Problems of Its Realization

Academic journal article Review of European Studies

Guidelines of the Intensive Model of Development of the Banking System of Russia and the Actual Problems of Its Realization

Article excerpt

Abstract

The banking system being an economic system is in course of constant development. Its structural elements must work together to bring the best effect. The article explores the present status of the Russian banking system and discusses the targets of its ongoing reforms. Modernization of the banking system of Russia is regarded in the contexts of current situation, role of the government and other market participants, actual problems including sanctions. Interconnection is traced between ongoing and planned measures designed for the banking system modernization and the development of main areas of the Russian economy.

Keywords: banking system, targets of development of the banking sector, reforms and modernization of the banking systems, new banking technologies, liquidity, regulation

1. Introduction

The modern banking system of Russia is a properly developed, using the best standards and effectively working (Figure 1) complex of the credit institutions realizing the functions of accumulation and mobilization of temporarily unused money, credit, payment, securities brokerage and others.

The quantity of the banks was formed on the evolution base and influenced by the market. The number of banks as at August 01, 2014 was 1057. Acting ones-877. 263 of them had the General license. (Sokolov & Martynenko, 2014)

The banking system of Russia is in the constant and positively unreversable development process. Sometimes it develops according to the plans (acting one is a Strategy till 2015). On the different stages of its evolution it faces obstacles which correct some steps of the Strategy but never changes the key Strategy goals. This situation we can see nowadays.

The Russian banking system faced an unprecedented situation because of an external factor in 2014. USA, EU and Japan imposed sanctions targeting biggest Russian banks (Sberbank, VTB, Gazprombank groups and Russian Agricultural bank). These financial institutions hold 57% of the market and in fact are the most important and reliable part of the national banking system.(Bank of Russia, 2014) As they have got shrink of the funding base, we can speak about the tangible sanctions against whole banking sector of Russia. This factor inevitably reflects on the other sectors of the Russia's economy.

Also there is a strong specific internal factor. The policy of the Central bank of the Russian Federation which was designed to eliminate the unfair players from this market stressed the system long before the factor of sanctions appeared. During the period Sept. 30, 2013-Sept. 30, 2014 81 licenses were revoked, including 74 banks and 7 non-banking credit institutions. These figures are fourfold comparing the year before. The payments of the Deposit Insurance Agency grew from RUB 14.3 bln. in 2012 to RUB 145.5 bln in September 2014 (World Bank, 2014). 180 banking licenses were revoked as at the end of August 2014 all over the country. (Sokolov & Martynenko, 2014)

Such challenges must be regarded in the process of update of the Strategy of the Russian banking sector but must not change the conceptual vector of its development and the further described main guidelines.

Mitigation of the negative external and internal factors, elimination of the existing problems of the banking system of Russia and encouraging of its qualitative transition are the main conditions of the intensive model of the system's development.

The guidelines of the Russian banking sector development (Figure 2) shows the main directions for the system modernization now and in the future.

Russian Government and the Bank of Russia focused on the regulation streamlining promoting the reforms and modernization of the banking sector. It is supposed that such policy provides more efficient functioning of the system, its better input into the growth of economy. In should primarily improve the process of transformation of the potential financial resources into loans and investments. …

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