Academic journal article Asian Social Science

Institutional Aspects of Provision of Sustainability of Budget System of the Russian Federation

Academic journal article Asian Social Science

Institutional Aspects of Provision of Sustainability of Budget System of the Russian Federation

Article excerpt

Abstract

The article views institutional aspects of provision of budget system of the Russian Federation in the context of development of financial institutions for strengthening of income base of budget system, reduction of non-oil and gas deficit, targeted use of budget assets, increase of debt sustainability of budget, increase of effectiveness and transparency of budget system, and creation of stable financial conditions of development of the Russian Federation.

Keywords: financial institutions, fiscal transparency, budget sustainability

1. Introduction

Financial institutions have a systematizing role in fiscal system, as they create foundations for socio-economic development of the state. At that, their formation should be oriented at the best foreign practices from the point of view of implementation of institutions (including expenses for receiving necessary information concerning institution, its distribution, signing corresponding contracts, and passing the laws), which will facilitate the achievement of socially significant results and sustainability of budget system.

Large importance and significance of institutions in economic reality is widely known. Definitions "institutions", "institutional environment", "institutional changes", "institutional structure", "institutional order" vary a lot. Therefore, it is important to determine their hierarchical interconnection.

According to theoretical basis of institutional theory, institutions are treated as rules and standards of behavior, i.e., they should be viewed as regulatory principles, allowing or forbidding some or other actions. On the one hand, such rules limit or stimulate actions of economic subjects, and, on the other hand, - allow them to make rational choice and forecast the actions of those that surround them (Kuzminov, 2005). Therefore, financial institution is a complex cooperation of formal and informal principles, rules, and norms which determine and regulate activities of person in the sphere of finances.

The main elements of the system of financial institutions are structural characteristics of financial system and the whole socio-economic development of the state. At that, it is possible to distinguish three foundations of institutional elements - regulatory, normative, and cognitive (Scott, 1995).

2. Theoretical Base and Materials

On the basis of the theory of institutional changes of D. North, institutional environment, or institutions, can be presented by group of individuals which are involved into targeted activities. Limitations which are bound by institutional structure (together with other limitations) determine variety of possibilities. D. North considered that the main restraining factor in economic development were transaction expenses which emerge due to the fact that information has a value and is asymmetrically distributed among the parties of the exchange. So, institutional structure decides which types of knowledge are necessary for receiving maximal feedback, and competition urges organizations to constantly invest in receipt of knowledge and experience for the purpose of development and survival (Leontyev, 2011).

In its turn, institutional structure of budget system reflects ordered totality of financial institutions, in which basis the formal and informal rules are in dynamics of development, appearing and supplementing each other in interconnection. The recurring interconnections of economic agents allow forecasting evolutionary tendencies in development of financial institutions. In this context, it is necessary to determine the order of usage of institutes, i.e., institutional order of budget system. In these approaches, the landmark is definition by M. Olson (Olson, 1998), who thought that institutional order is a systemic component of economic order which determines fundamental regularities while performing economic activities by main agents, independently of spheres and types of activities. …

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