Criteria for classifying banks as systemically important in the Russian banking system

Abstract

Subject. We address the criteria to classify banks as systemically important, their activities and the assessment of their impact on macroeconomic indicators. Objectives. The aim is to determine areas of regulation, based on criteria for classification of a bank as systemically important in the Russian banking sector, and taking into account its impact on the national economy. Methods. The study draws on methods of logical, statistical, and comparative analysis, as well as the correlation analysis to determine the correlation between financial indicators of systemically important banks and the country's GDP. Results. We offer the following criteria to determine systemically important banks, in addition to indicators used in the Russian banking practice: ‘interchangeability’ of a bank (based on the volume of payments in payment systems), ‘complexity’ (based on bank's activity in the securities market). Our correlation and regression analysis shows a significant positive impact of activities of too-big-to-fail banks on the Russian economy. The greatest impact on GDP is noted for indicators, like the volume of total capital, deposits of the population, loans to individuals. Therefore, the regulation can be aimed not only at preventing crisis situations and instability of the financial system, but can also be a tool for increasing the rates of economic growth. Conclusions. If the Bank of Russia uses the proposed additional criteria, it will enable to include in the list of such banks the internationally active credit institutions serving significant volumes of settlements in payment systems, and carrying out transactions with complex high-risk derivatives.