DOI: 10.32609/j.ruje.11.128519

Authors: Bhagirath Baria, Ria Kusumaningrum, Anggita Suryana, Devanshi Mehta

Abstract: This paper addresses a significant gap in the existing literature on financial inclusion — namely, the dynamic instability of the impacts generated by its determinants in four major emerging market economies: Brazil, Russia, India, and China. A time-varying coefficients framework is applied to examine whether the factors shaping financial inclusion at the aggregate level produce nonlinear effects over time. The analysis covers the period from 2000–2001 to 2022–2023. A composite financial inclusion index is constructed to capture inclusion across three key dimensions — availability, access, and usage — using the distance function approach. Three classes of determinants are modeled: socio-demographic, infrastructural, and macroeconomic variables. Evidence indicates structural instability in the financial inclusion process for the BRIC economies, with several determinants exerting nonlinear impacts over time. The findings challenge the conventional assumption of time-invariant relationships between financial inclusion and its dominant determinants. The results reveal considerable temporal volatility in the effects of macroeconomic factors, including growth and inflation, on financial inclusion across emerging markets. Policymakers should adjust strategies, moving beyond assumptions of linear processes and managing dynamic, nonlinear factors more effectively to achieve universal financial inclusion.

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DOI: 10.32609/j.ruje.11.144107

Authors: Maria S. Lymar, Henry I. Penikas

Abstract: The objective of the current work is to estimate to what extent support measures of the Bank of Russia and the Government of the Russian Federation promoted financial stability of banks and the financial market overall so to sustain lending economy-wide during the crisis periods of 2014, 2020, and 2022. These measures mutually assured the financial stability of the institutions and enabled them to extend lending within the economy for RUB 8 trillion in 2022 (~$100 billion, or 8%+ of the total loan book), of which Bank of Russia measures contributed to RUB 4.3 trillion of the total, the Government of Russia — to RUB 2.0 trillion, while the synergy was RUB 1.7 trillion.

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DOI: 10.32609/j.ruje.11.145314

Authors: Andrey A. Sinyakov, Tatyana I. Shelovanova

Abstract: The booming retail trade and the above-target consumer prices inflation in 2023–2024 in Russia, amid tightening monetary policy stance, raise an issue of the strength of the monetary policy interest rate channel. The focus of our paper is the interest rate elasticity (given inflation expectations) of a household’s loan request probability. We argue that a household, rather than an individual consumer, is the appropriate unit of study. We use unique data on households’ loan applications obtained from the AllRussian survey of consumer finances, which contains information on more than 6,000 households in Russia. Actual loan applications cover the period of 2020–2022, and the survey also includes information on households’ borrowing intentions as of late spring–summer 2022. The interest rate channel of monetary policy, with regard to unsecured loans, although statistically significant and working in the right direction, does not appear to be economically significant from a microeconomic perspective. This suggests that the Bank of Russia, in relying on this channel for this type of credit, might have to increase the key rate significantly to cool down consumer demand and bring retail inflation to the target. We find that higher households’ inflation expectations positively correlate with the loan demand, thus, households’ inflation expectations do have real effect. Thus, anchoring inflation expectations is important for achieving macroeconomic stability. We empirically identify a set of Russian households’ characteristics that are key drivers of households’ requests for credit. Demographics is an important factor of the demand.

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DOI: 10.32609/j.ruje.11.144303

Authors: Jalal Abu-Alrop

Abstract: This study aims to evaluate the efficiency of Russian banks, identify the factors influencing it based on their size and ownership type, and forecast future trends in the banking sector. The analysis utilized data from 680 Russian banks over the period 2000–2023, employing Data Envelopment Analysis (DEA) to measure technical efficiency, panel data analysis to determine efficiency-related variables, and Monte Carlo simulation to predict future performance for the years 2024–2026. The findings indicate a general decline in bank efficiency over time, driven by economic and political crises, particularly those linked to oil price fluctuations and sanctions. The study reveals that an increase in client funds (non-credit organizations) and higher leverage ratios are associated with improved bank efficiency. Among bank categories, mega-banks with assets exceeding 1.05 trillion rubles demonstrated the highest efficiency, followed by medium banks, large banks, and small banks, respectively. Moreover, Russian domestic banks exhibited higher efficiency levels compared to their foreign counterparts. The study forecasts continued increases in interest rates in the coming years, driven by the instability of the local currency and rising inflation caused by the Russia–Ukraine conflict. Significant changes in client funds (non-credit organizations) are also anticipated, with a decline expected in 2024, a temporary increase in 2025, and another decline in 2026. These fluctuations reflect instability stemming from corporate performance downturns and capital outflows due to economic sanctions. In addition, the operational efficiency of Russian banks is expected to decline, with an increase in the proportion of distressed banks, especially among small and large banks struggling with rising funding costs. The study concludes that funding sources, associated costs and leverage are the most important factors affecting the efficiency of Russian banks.

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DOI: 10.32609/j.ruje.7.76647

Authors: Michael Alexeev, Mira Nurmakhanova, Leonid I. Polishchuk

Abstract: Formal institutions and social capital interact with each other in multiple ways. We argue and show empirically at the cross-country level that in the case of group lending, contract enforcement complements bonding social capital and substitutes for bridging one. It means that payoff to social capital in group lending depends on social capital type and is contingent on the quality of contract enforcement which serves as a sorting factor, working in the opposite directions for different stripes of social capital. These results are robust to various estimations, sets of controls, and social capital measures.

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DOI: 10.3897/j.ruje.4.27737

Authors: Alexander M. Karminsky, Ella Khromova

Abstract: The paper is aimed at comparing the divergence of existing credit risk models and creating a synergic model with superior forecasting power based on a rating model and probability of default model of Russian banks. The paper demonstrates that rating models, if applied alone, tend to overestimate an instability of a bank, whereas probability of default models give underestimated results. As a result of the assigning of optimal weights and monotonic transformations to these models, the new synergic model of banks’ credit risks with higher forecasting power (predicted 44% of precise estimates) was obtained.

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