Comparing the Banking Models in China and Russia: Revisited

Abstract

In 1999, the Studies on Russian Economic Development published an article comparing the Russian model of banking with the Chinese one [Speranskaya, 1999]. The author looks at government banking and the relevance of banks for the non-financial economy and concludes that banking models in China and Russia are different. Since the time of that publication, the Russian government has increased its presence in the credit system as regulator, strategic planner and service provider. The authorities have pursued the industrial policy aimed at nurturing a few «national champions» [Vernikov, 2014] and increased the degree of interference in the lending decisions of banks. The new evidence suggests reverting to the question raised by Speranskaya [1999], namely whether Russia really abandoned the Chinese path of state capitalism in the banking sector as opposed to the industrial sectors. We look for typological similarity or dissimilarity between the two banking systems. The object of the study is restricted to commercial banks, leaving beyond the scope of analysis development or “policy” banks and non-banking financial institutions. Our main hypothesis is that the institutional models of banking in China and Russia are essentially coherent. These models gradually converge as the differences are eroded or do not become broader, while coherence grows, not least via institutional imports from China to Russia.

Keywords: China, Russia, banks, government, comparative institutional analysis, path dependence, institutional self-adjustment

JEL Classification: G21, G28, H82, P34, P52