55 Pages Posted: 15 Feb 2017
Date Written: October 26, 2016
Following the severe financial crises of the 1990s and early 2000s, substantial efforts have been undertaken in Russia and Turkey to diversify and deepen the financial systems. However, despite unquestionable improvements, financial deepening in Russia and Turkey has taken place at a slower pace than in other major emerging economies. Our paper highlights that this is in part a consequence of a highly volatile economic environment and deep-seated institutional and structural bottlenecks. Though authorities in both countries have committed to sounder economic policies and have implemented important structural reforms to improve the institutional environment and overcome structural weaknesses, over time reform fatigue has gradually taken hold. As a consequence significant gaps and weaknesses in the institutional and business environments still characterize, to a different degree, Russia and Turkey. These factors have not only slowed the development of the financial system as a whole, but have also contributed to the build-up of key vulnerabilities, which have come to the fore more recently in the context of a less supportive external environment.
Keywords: exhaustible resources, financial deepening, institutional quality, international banking, international finance, Central and Eastern Europe, Russia, Turkey
JEL Classification: E65, G21, O43, O57, P17, P27, P34, P52, Q32
Suggested Citation: Suggested Citation
Auer, Simone and Cocozza, Emidio and Colabella, Andrea, The Financial Systems in Russia and Turkey: Recent Developments and Challenges (October 26, 2016). Bank of Italy Occasional Paper No. 358. Available at SSRN: https://ssrn.com/abstract=2917113 or http://dx.doi.org/10.2139/ssrn.2917113