Assessment of Availability of Consumer Loans in the Regions of Russia

Abstract

Introduction The development of Russia's banking sector has been very uneven in the recent 15 years. Major crises in the economy (for example, the crises of 1998 and 2008) led to the bankruptcy of some largest banks. The economic reform, which has been undertaken lately, opened a new stage and goals in the development of the banking system. The pre-crisis state of the economy stimulates an increase in the number of loans granted to individuals, i.e., consumer loans. Consumer loan is one of the most common types of banking activities in developed Western countries. It should be mentioned that the scope of application of consumer loans is significant, as they are used not only to buy durable goods, such as cars, appliances, etc. For example, buying property in installments is basically also one of the varieties of long-term consumer loans; current purchases made with credit cards are not inferior to the use of consumer loans, as far as large purchases are concerned. Consumer loans are very widespread in industrialized countries primarily because owing to the use of this technique to finance purchases market capacity on a range of consumer goods and real estate is greatly increasing. Without limiting the preceding, in ongoing conditions availability of credit resources of commercial banks is very appealing to individuals, as there is a tendency of decreasing the key interest rate of the Central Bank of the Russian Federation. It has been 10% since 19 September 2016. The results of the research can be used to smooth out the uneven availability of credit resources in different regions of Russia and, as a result, their unbalanced development, as well as for the balanced development of the Russian economy on the whole. Data and Methods Consumer credit market in Russia is going through lean times (Natocheeva and Rusanov, 2016; Molodyko, 2015; Gerzelieva, 2016; Rusanov et al., 2015; Sharma, 2014; Sibirskaya et al., 2016). This is evident from the data presented in Figure 1. According to the Bank of Russia, there was a significant reduction in the volume of loans in January 2015 compared to January 2016, and this figure fell by 6.4%. The largest volume of loans was provided in January 2015 (11,028,783 mln. roubles), and then gradually decreased until it reached the minimum of 10,318,928 mln. roubles in April 2016. According to Figure 1, we can also notice a slight increase in the cost of loans granted to individuals. Thus, in July 2016 individuals received loans for a total amount of 10,365,553 mln. roubles. As far as the volume of loans granted in foreign currency is concerned, a negative dynamics can be traced there as well (Figure 2). The drop in volume of loans is not as rapid as the one in the national currency. For example, in February 2015 the volume of loans increased by 19.9% and amounted to 360,690 mln roubles in comparison with January of the same year, which is the highest value in the period from January 2015 to July 2016. The lowest value was recorded in July 2016 and amounted to 207,365 mln roubles. The slowdown in growth of the loan market to individuals is to a greater extent due to the financial crisis in 2014, which resulted in a decrease in personal income, rising prices, weakening the rouble as well as an increase in interest rates. One reason for the decrease in the volume of loans to individuals is the loss of credibility to consumers (Sysoeva, 2015; Tursunov, Sergeyeva, 2016; Arslan-Ayaydin et al., 2014; Nechaev and Antipina, 2016), which is caused by an increase in the number of loans to cover arrears. Thus, according to Fig. 3, it can be inferred that the share of loans to cover arrears over 90 days, granted in roubles, increased by 7.9% in January 2015 and by 10.5% in January 2016. However, this indicator reached its maximum of 10.9% in March 2016 and dropped by 0.3% and amounted to 10.6% in August 2016. Consequently, the volume of outstanding loans to individuals formed a steady downward trend. …