The Impact of State-Controlled Banks on the Russian Banking Sector

Eurasian Geography and Economics, 2012, Vol. 53, No. 2, pp. 250-266

16 Pages Posted: 23 Feb 2014

Date Written: March 1, 2012

Abstract

We examine the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country’s banking system in early 2011. The author offers a credible estimate of the size of the country’s state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, we explain the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author’s interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country’s banking sector.

Keywords: Russia, Russian banks, government control, state-owned banks, public sector, bank assets, bank deposits, bank loans, Chinese banks, private banks

JEL Classification: G21, G28, H82, L80, P52

Suggested Citation

Vernikov, Andrei V., The Impact of State-Controlled Banks on the Russian Banking Sector (March 1, 2012). Eurasian Geography and Economics, 2012, Vol. 53, No. 2, pp. 250-266, Available at SSRN: https://ssrn.com/abstract=2399486

Andrei V. Vernikov (Contact Author)

Institute of Economics RAS ( email )

32, Nakhimovsky Prospekt
Moscow, 117218
Russia

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