Credit Organizations Research Articles

Risks of Russian Commercial Banks in Mortgage Lending

The article is devoted to studying the risks of credit organizations in the process of mortgage lending in the Russian Federation. It identifies the factors affecting mortgage lending Based on the identified factors, it specifies the risks of commercial banks in mortgage lending and characterizes each of the listed types of risks The article examines the indicators of the primary and secondary markets for mortgage lending in Russia that reflect the impact of risks on the activities of credit organizations. It notes notes that due to the high growth rates of mortgage. The undertaken analysis makes it possible to determine the key role of the credit risk and the liquidity risk in a commercial banks the activities in mortgage lending. The paper offers the ways to minimize the risks of commercial banks in mortgage lending. It notes that due to recent changes in construction of residential real estate, banks may face potentially new risks.

Topical Problems of Criminal Prosecution for Illegal Banking Transactions

In recent years there has been an increase in the number of crimes under Art. 172 of the Criminal Code of the Russian Federation («Illegal banking»), whose subjects, among other things, act as intermediaries for their clients and are not one of the sides in a contract with the bank. Such practice is not indisputable, because innocent people could be prosecuted if there is a mistake in the qualification of actions. The authors of the article assess the actions of physical persons providing the services of intermediaries for the bank clients who open accounts, make payments, conduct encashment and different cash operations. Specifically, the authors note that different actions of the bank and the client connected with banking transactions are designated in law in the same way, which leads to controversial situations, including the qualification of such actions as crimes. The authors determine the legal nature of banking as an aggregate of systemic banking operations and conclude that the actions of physical persons — intermediaries who are not bank employees or managers or other persons authorized by the clients of the bank — do not correspond to the characteristics of a crime under Art. 172 of Criminal Code of the Russian Federation. They stress that the current edition of Art. 172 of the CC of the RF does not allow for an unambiguous interpretation of the subject of the analyzed corpus delicti; the authors also present data from court practice that testify that it does not have a uniform assessment. The position of the Constitutional Court of the Russian Federation on this issue raises questions. The authors support the legal approach according to which Art. 172 of the CC of the RF refers to a special subject (head or other employee of a credit organization). They also point out that the disposition of the norm, in the part that includes subjective characteristics, makes it possible to prosecute a person for both intentional and negligent actions, which is not very well-grounded; the authors support the position that a person can only be prosecuted for illegal entrepreneurship if the intention is determined.

TRENDS OF ECONOMIC RELATIONS TRANSFORMATION IN CONTEXT OF DIGITAL ECONOMY (ON THE EXAMPLE OF COMMERCIAL BANKS AND BUSINESS SECTOR)

Background: The article presents the results of the study of digital transformation trends of economic relations between credit organizations and organizations of the business sector due to their significance for stable growth of Russian economy. Ongoing changes identified in this article as trends require thorough study in order to increase the efficiency of economic relations between credit organizations and organizations of the business sector. Research methods: survey, questioning, grouping, graphing, comparison, analysis, synthesis. Results of the study: 12 trends of the economic relations transformation between credit organizations and organizations of the business sector in context of digital economy were highlighted and survey was conducted among two groups of respondents – representatives of credit organizations and business entities. On the grounds of received results key trends were highlighted and comparative analysis of trends estimates of two groups of respondents was conducted. Discussion: summary of key trends was conducted, which allowed to highlight an important background for developing organizations of business sector – to connect Internet, in addition, advisability of monitoring credit organizations in terms of offering digital services and monitoring business sector in terms of increasing indicators of digital interaction was proved. Conclusion: a set of measures for increasing digitalization of economic relations between credit organizations and business sector was developed.

Reforming Russian legislation for crimes in the digital economy

The aim of this research work is to analyze Russian criminal legislation on punishment for computer crimes. The growth in the number and intensity of cyber-attacks throughout the world also leads to an increase of costs for companies and society as a whole to provide protection against cyber-attacks and to prevent losses from them. The financial sphere of the economy suffers especially. The article provides statistical and expert data on the potential damage from the suspension of the financial institution’s activities, including lost profits and costs for restoring websites after cyber-attacks. A significant increase in the number of crimes committed with the help of digital devices and a multiple increase in the amount of damage from them were revealed on the basis of an empirical study. On the part of the business community, the demand for the state to toughen penalties for computer crimes is increasing. To this end, in 2018 novels were introduced into the Criminal Code of the Russian Federation, which toughened criminal liability for embezzlement of funds from bank accounts or electronic money. It is shown that the changes introduced by the legislator in the criminal legislation of Russia take into account modern threats to economic security and increase the level of protection of the financial interests of citizens, credit organizations and the state as a whole.

Резервные активы – источники пополнения ресурсной базы банковского сектора и повышения его устойчивости

The paper focuses on the importance of using reserve assets in order to increase the bank financial stability and the banking system as a whole. The essential requirements for reserving commercial banks have been presented. The methods of regulating the required reserves have been studied. The specific features of applying the required reserves in banking activities (reserve requirements and liquidity, monetary policy, reserve requirements as a monetary tool, reserve requirements as a fiscal tool) have been revealed. The schedule of averaging periods of required reserves for 2019 is being considered. The general principles which credit organizations are guided by when creating reserves are the following: obligatory availability of reserves for all credit organizations throughout their existence; forming reserves in relation to liabilities to legal entities and individuals; possibility of removing from the list obligations for which reserves have been created. It has been mentioned that the main objectives of the reserve requirement system are to provide banks with sufficient liquidity and to regulate the money supply. Particular attention is paid to the Central Bank as a reserve requirements regulator. In accordance with the changes of the Central Bank of July 1, 2019, the established standards on reserve requirements for deposits in national currency are set at 4%, in foreign currency at 14%. Manipulating the required reserve rate will provide the Central Bank with the opportunity to adjust the liquidity and solvency both of an individual bank and the entire banking system. The method of averaging required reserves includes the possibility for a commercial bank not to transfer reserves to the Central Bank based on a certain sum 
 of money. The averaging coefficient is set at 0.25 to the standard volume of required reserves

Analyzing Impact of Computer Attacks on the Banking System of the Russian Federation

The article analyzes damage caused by attacking finance organizations in the Russian Federation through activization of hacker groups. The mentioned attacks were mainly directed at banking cards’ processing, cash machines and the SWIFT system, an international system of transmitting finance information and payments. The growth in hacker penetrations can be seen in all sectors of Russian economy, it is based on informational confrontation and aims at destabilization of considerable objects of critical information infrastructure. Today special attention is paid to attacks of hacker groups, which get financing from states and criminal groupings in order to exert influence on the leading banks of the world. The author investigated the key methods of attacks of finance organizations. The role of the Federal service on technical and export control and the Department of information security of the Bank of Russia was described. By assessing the impact of computer attacks the author came to the conclusion that the Russian banking sector is vulnerable to computer attacks on informational systems that could cause damage not only to small but also big credit organizations, which possess over 60% of the Russian banking sector assets.

Trends and Prospects of Development of Financial Innovations in the Russian Banking Business

The relevance of the article is because the modern development of the Russian banking business takes place in the context of increased competition and crisis phenomena in the financial markets. The policy of constant innovations is one of the main factors for the successful development of banking activity. Financial innovation is a crucial factor in the competitiveness and sustainable development of the banking sector. Of particular relevance is the study of trends, based on which the development of the innovative activity of banks and non-bank credit organisations is currently taking place, as well as the determination of the specifics of the innovation process in the banking sector.The purpose of the article is to conduct research on the current state of the most popular at the present stage financial innovations in the banking sector, identify trends in their development, and determine the future directions for the development of financial innovations in the Russian banking business. In this paper, we analysed analytical information, which allowed us to identify trends in the development of financial innovations in the banking sector, and determine their role in the development of the banking sector in Russia. In the course of the study, the author used the methods of analysis, synthesis, the complexity of the approach, comparison, consistency, and other methods of cognition. Based on the research results and personal experience in the development and implementation of new banking products at Unistream CB, the author predicts the future directions of development of financial innovation in the banking business.The author concludes that their introduction has an influence on the transformation process in the real and financial sectors of the Russian economy, and contributes to the organisation of their effective interaction, accelerates the development of the entire economic system of the country.The main objectives of the development of financial innovations in the banking sector at the present stage are the development and implementation of new banking products. It requires further study of the theoretical and practical aspects of introducing financial innovations, a detailed analysis of domestic and foreign experience, and needs implementation of knowledge gained in practice to modernise and organise productive interaction financial and real sectors of the Russian economy.

JAPAN’S EXPERIENCE IN USING ANALYTICS OF BIG DATA TO REDUCE CREDIT RISK IN FINANCING SMALL AND MEDIUM ENTERPRISES

The experience of Japanese experts in using big data analytics to reduce credit risk when financing small and medium-sized enterprises has been reviewed. Three multiple regression models were used to predict the likelihood of medium-sized enterprises default. The results of the study have showed, that the bank account model complements the financial model well, which will allow credit organizations to increase lending to medium-sized enterprises. It has been concluded, that the use of big data analytics requires the development of an information model of the subject area, which will provide a significant improvement in lending to medium-sized enterprises in Russia. The experience of the Asian Development Bank in researching the activities of medium-sized enterprises shows the practical possibility of using big data analytics by any development bank.

Prospects of Developing Market of Consumer Lending In Russia

Currently, development of the consumer market is becoming increasingly important. Loans provided by a commercial Bank contribute to solving financial problems of the population, as well as enables customers to meet their needs for the goods and services they need, without having a sufficient monetary means at the present moment. The growth of consumer activity activates the production processes, thereby increasing the market capacity, which contributes to developing the economy and, consequently, to improving human wellbeing. The issues related to the consumer credit market development affect not only the problems of the state of the banking system monetary mechanism as a whole, but also the mechanism of lending in a separate commercial bank. At the same time, the consumer lending is usually associated with high credit risks for the credit organization, which determines the topicality of the problems and the need to improve the consumer lending market in Russia.

FEATURES OF THE CURRENT STATE OF THE BANKING SECTOR OF THE RUSSIAN FEDERATION AND THE MAIN TRENDS OF ITS DEVELOPMENT

Reduction of the number of credit organizations in the banking sector of the Russian Federation has been considered. The paper has been based on the data of Statistical Bulletin of the Bank of Russia for 2015-2017 years. Attention has been paid to some problems of creating banks resources potential especially because of declining external financing. The problems of small and medium-sized banks, including the availability of state budget funds have been designated. The main characteristics of the dynamics of lending to non-financial organizations and individuals have been considered. A discrepancy between the high financial results of the banking sector and a very modest contribution to the investment activities of non-financial organizations has been noted. Particular attention has been paid to the difference in interest rates on loans and deposits for different categories of borrowers and depositors.

MANAGEMENT ACTIVITIES EFFECTIVENESS IN MODERN RUSSIAN INSTITUTION IN THE CONTEXT OF HEAD WORKPLACE MODELING

Purpose: The scientific approach to the organization of labor and the workplace of the institution head involves the search for the most optimal model or technique acceptable to the Russian conditions within the current management culture, traditional views on the nature of managerial work, the scale and effectiveness of management activities.
 Methodology: Methodological guidelines for the study of workplaces’ organization of credit and financial institutions’ heads are based on the provisions of modern ergonomics and the principles of a system-based approach, allowing justifying as a significant one the environment-oriented approach.
 Result: The obtained results served as the basis for the development of appropriate recommendations to optimize the current situation in the context of eliminating existing gaps and problems in the credit and financial sector of the Russian economy from the standpoint of optimizing the process of organizing working places for managers of institutions in this profile.
 Applications: This research can be used for universities, teachers, and students.
 Novelty/Originality: In this research, the model of the Management Activities Effectiveness in Modern Russian Institution in the context of Head Workplace Modeling is presented in a comprehensive and complete manner.

FEATURES OF THE DEVELOPMENT OF BANKING INFORMATION SYSTEMS IN RUSSIA AND FOREIGN COUNTRIES

One of the areas of activity in modern economy, where information technology value is traditionally high, is the financial and credit sphere. Computer banking networks provide a communication function and provide access to shared resources. Information systems of credit institutions allow to provide remote customer service. This article examines the peculiarities of banking information systems in Russia and abroad in two main areas: remote banking services and information technologies for the management of commercial banks. The authors have studied into the features of banking information systems in Russia and abroad, and have characterized the above mentioned systems, outlined the current trends in the IT development in credit organizations of modern Russia. The research allowed the authors to drawa conclusion that information technologies play an important role in attracting new customers to banks and ensuring interaction with them.. Information banking technologies directly determine the credit organization's ability to develop business and improve internal processes and customer service systems. In this connection, the article suggests the further development of IT sphere as a factor of improving the quality of services and increasing the profit of banks.

THE ROLE OF KEY PERFORMANCE INDICATORS (KPI) IN BANKING ACTIVITIES

The article shows the importance of key performance indicators in banking activities, the factors that determine the key performance indicators, the reasons for choosing a specific key performance indicator and the correct use of key performance indicators. The analysis of key performance indicators used in banking activities was carried out. The general classification of key performance indicators most often used in banking activity is given. Comparative analysis of the listed credit organizations on the main banking key performance indicators were carried out. To assess the effectiveness of credit institutions, economic and mathematical modeling is presented. The resulting factor of the model is the bank multiplier, and the independent variables are the most frequently used in the banking activity key performance indicators. Based on the economic and mathematical modeling, the forecasted values are computed, calculated as a trend over the last two years for all independent variables and a bank multiplier. The expert commentary is drawn from the prediction measures of the independent variables for the last two years. In addition, the article lists the reasons for the fall in the bank multiplier among the listed credit organizations

Credit Organization Risk Assessment Technology

Credit, market, operational, interest rate, currency risk of credit organizations, liquidity risk, legal regulation of such risks have been analyzed in the study. A risk assessment mechanism has been developed, which includes the following steps: assessing the reliability of financial statements, assessing the value of own funds (capital) of credit organizations, analyzing the financial condition of an investor, and assessing the value of assets. The problems of analyzing banking risks at each stage have been identified. A practical implementation of the developed methodology for analyzing the bank’s risks has been carried out, which allowed the use of “adjustment schemes” by credit organizations. The most dangerous are the schemes for artificially "inflating" the capital base of credit organizations, overstating the quality of assets, and formally reducing the risks taken. The proposed methodology has been recommended to be used to improve the risk management system of credit organizations.

LÍMITES A LA CONTRATACIÓN ADMINISTRATIVA CON EMPRESAS PRIVADAS ESTATALES

According to the Uruguayan administrative contracting law, the Administration is allowed to contract with other public entities and with private ones that are 100% state-owned, being allowed to do it directly. However, there are certain limits that the Administration must attend in order for such contracting to be adjusted to Law. These limitations tend to be more rigorous in the competitive contracting procedures convened by the Administration through the financing, in whole or in part, of international credit organizations. In any case, thedelimitation of the selected contracting procedure must be framed in the duty of good administration and in the law N° 18.159 of promotion and defense of competition.

Russia’s Banking Sector in 2018

As of January 1, 2019, the Russian banking system numbered 484 credit organizations. A year earlier then number stood at 542. During the year the number decreased by 58 organizations. Six years ago at the beginning of 2013, the number of credit organizations exceeded one thousand (1094). The Bank of Russia policy aimed at clearing the banking sector has triggered a reduction of the number of banks in operation. Over this period, the Bank of Russia withdrew more than 400 banking licenses. From late 2014 the policy aimed at withdrawing from the market those credit organizations which do not satisfy the requirements of the regulator coincided with the deterioration of the situation in the Russian economy and the imposition of international sanctions on major Russian banks. Correspondingly, already from 2014 the rate of banking license revocation has increased. When in 2013, around 4–5 banks on average per month lost their licenses then in 2014 the rate of banking license revocation increased to 7 lending organizations per month, and during the time of peak manifestations of crisis in the Russian economy and financial system seen in 2015–2016 on average 8 credit organizations per month lost the right to continue their banking activity. The number of revoked banking licenses peaked in 2016: the number of revoked licenses during that year hit 97. Moreover, 2016 saw the peak on the aggregate amount of the bank assets of the banks which lost their banking licenses: RUB 1.7 trillion or 2.0 percent of the overall volume of the banking sector assets.

A mechanism for resolution of credit organizations: The Russian practice

A mechanism for resolution of credit organizations: The Russian practice

Composition and Functions of Tools in Banking Supervision in Post-Soviet Republics (Russia and Tajikistan)

The article studies the most widely used tools of banking supervision, such as macro-economic control, distributive and structural control, finance sanitation. Among regulation tools of central banks a special role is attributed to normative and legal acts, methodological and preventive tools. The authors propose to divide all tools of banking supervision into two big categories: control and supervision (key ones) and tools of regulation (extra ones). One of the most important analytical tools meant to provide estimation of potential losses of credit organizations in case of economic recessions is macro-prudential stress-testing. It was grounded that tools of banking supervision and regulation cannot always allow us to reach a goal set by central banks of post-soviet countries, i.e. to lower the inflation rate. Cut in Inflation rate should not be the main goal of regulators. During the transition period in economy central banks should resolve wider range of tasks and use tools of banking supervision and regulation.

Corporate Loan Refinancing: Product Standard

The subject of the research is the refinancing of loans from third-party banks.The relevance of this problem comes from the fact that the May (2018) Presidential Decree sets the national development targets for the Russian Government to bring Russia into the five largest world’s economies by 2024, which requires the accelerated GDP growth impossible without increasing the performance efficiency of the banking system, a matter of great importance for the implementation of the monetary policy, and hence for the entire economy. The purpose of the paper was to develop methodological approaches to the development of standards for refinancing corporate loans through a matrix of requirements for the components of the process of refinancing loans from thirdparty banks based on an analysis of the terms of Russian commercial banks providing this service and best refinancing practices of credit organizations. The paper describes the purpose and basic conditions for refinancing corporate loans, borrower requirements as well as conditions, form and currency of loans, methods for loan repayment, types of collateral, a list of documents to be provided, procedures for refinancing in its various scenarios. It is concluded that the matrix of requirements for the refinancing process components is the core of the refinancing standard that prevents significant risks associated with the service and errors in making decisions to grant it. The proposed introduction of this standard into the banking practice fits into the work carried out by the Association of Russian Banks on the standardization of banking processes and products aiming to form open and transparent rules for interaction between a bank and a borrower in providing a refinanced loan.

THE COGNITIVE MODELING TECHNOLOGY FOR THE FINANCIAL ANALYSIS OF THE FINANCIAL-ECONOMY ACTIVITY OF THE ORGANIZATION

Objective. The increase in the efficiency of functioning of the (credit) organization due to the realization of procedure of the horizontal, vertical and trend (microscopic) financial analysis based on the formed innovative analytical coefficients system in the parametrical cognitive models block. Method. The financial analysis of the highly-integrated enterprises and (credit) organizations. Result. The innovative parametrical cognitive models block is the information basis of the (microscopic) financial analysis, contains the cognitive models for the horizontal, vertical and trend financial analysis of the enterprise or (credit) organization based on the formed analytical coefficients system, each from which acts as the difficult repertoire of parameters (indicators), echeloned to a number of portraits and stratificated to the several independent sets located on two different levels of the specified hierarchy (structure). Conclusion. The financial analysis of the highly-integrated (credit) organizations initiates the need of the accounting of a wide range of the different scientific fundamental and applied directions of modern science, and also causes the need of use of the innovative device of research.