Russian Finance Research Articles

New Instruments for Financing Small and Medium Enterprises in Russia: Crowdinvesting

Access to financing is a fundamental factor determining growth opportunities for small and medium enterprises. Along with the state forms of support for the subjects of this business segment, as well as traditional banking products, private investment mechanisms are being developed through the establishment and extension of crowdinvesting platforms. They imply involving funds of population as the most important market agent. The aim of the article is to reveal the key importance of the institutional development of the crowdfunding and crowdinvesting market as a modern tool for supporting small and medium enterprises, reproduction of people’s personal savings and incomes of professional investors. The following scientific methods and approaches were used in the study: observation, comparison, analogies, analysis, synthesis, method of expert assessments, system and structured approach. The authors’ definition of crowdinvesting is given. Three fundamental features of crowdinvesting are defined: collective microfinancing of a project from an alternative set of startups, an intermediate agent in the form of a remote platform, financial retribution. To prove the development of the world and domestic crowdinvesting market, its condition and the performance indicators of well-known crowdinvesting companies are characterized in dynamics. The authors revealed the key advantages of crowdinvesting, factors stimulating of its volume growth in Russia, as well as risks, mainly associated with insufficient regulation of the new and fast-growing institutional mechanism of crowdinvesting. The important perspective of crowdinvesting as an instrument of project financing in Russia is highlighted on the example of specific scopes for investment, multifunctional services of Russian platforms, expanding pool of investors, new financial and technological methods of exchange and support. The study allowed identifying a number of key areas for crowdinvesting development in Russia. The work mainstreams: building an effective regulation system for crowdinvesting platforms, including through developing self-regulation tools, a co-financing program for crowdinvesting projects from development institutions, the work of the regulatory sandbox, legislative consolidation and support for implementing new types of information and economic interaction on crowdinvesting platforms (not only B 2B, P2B, but also G2B, B 2G).

Healthcare Financing: European Experience and Russian Practice

The subject of the research is healthcare financing systems in European countries and Russia. The relevance of the problem stems from the possibility of using successful foreign experience for the organization of healthcare financing in Russia. The purpose of the research was to examine the specific features of the establishing and funding healthcare models in countries of Europe and the possibilities of their experience in organizing healthcare financing in the Russian Federation. The paper examines the current state of the two models of health financing in the EU — budget funding and insurance. By the example of individual European countries, the operation specifics of each model are analyzed, their advantages and disadvantages are assessed. Particular attention is paid to the specifics of the healthcare financing system in Russia and its difference from foreign systems. Taking into account the foreign experience and the need to improve the Russian compulsory healthcare insurance (CHI) system, the paper proposes ways to improve the Russian model of healthcare financing: establishment of a unified organizational and financial CHI model; introduction of a system of equal participation of the employer and employee in the financing of compulsory healthcare insurance; introduction of a family insurance system; promotion of voluntary healthcare insurance programs. It is concluded that the keypoint in the CHI system restructuring should be the search for socially acceptable and economically justified forms of attracting public funds. At the same time, it is extremely important that the funds received by medical institutions do not increase the shadow incomes in the economy but are spent on the development of the healthcare system.

Особенности аудита отчетности кредитных организаций в Российской Федерации

Th e paper deals with current trends in the development of the credit institutions’ fi nancial statements audit in the Russian Federation. Th e authors deal with the issues of vesting the Central Bank of Russia with powers in the fi nancial institutions auditing field, as well as dwell on the analysis of the provisions defi ning the features of the credit institutions’ fi nancial statements audit at each stage of the audit assignment included in the “Methodical recommendations on credit institutions’ financial statements audit” approved by the Audit Council under the Ministry of Finance of Russia. The article pays special attention to institutions’ internal control testing.

Sustainable banking: conceptualization and implementation practice

The article explores the actively developing and little-investigated phenomenon of a modern financial system termed “sustainable banking.” The relevance of the study is due to a number of circumstances: first, awareness of the growing importance of sustainable (responsible) fi-nancing as key driver of sustainable development for solving large-scale economic, social, and environmental problems; second, the lack of a generally accepted holistic system of views on sustainable banking, the content of relevant concepts, which indicates that its conceptualiza-tion is incomplete; third, scholarly and public interest in foreign banks’ modern practices of sustainable development, which opens up broad opportunities for Russian banks to use their experience. This article determines the direction of sustainable banking, reveals the content of its conceptualization, and identifies features of the formation of this phenomenon in Rus-sia. By sustainable banking, the authors understand processes of theoretical comprehension and generalization of the practice of banks that declare a commitment to ideas of sustainable development, leading to the formation of ideas about this phenomenon and formation of a relevant system of concepts. The article describes current approaches to sustainable banking; shows the most important international initiatives for incorporating ideas and principles of sustainable development into activities of financial institutions, as well as practical steps taken by various financial institutions (development banks, traditional banks and so-called non-traditional banks, known as sustainable banks) for integrating principles of sustainable devel-opment into strategies and bank operations. The authors conclude that this integration and the development of sustainable banks allows us to speak of the formation of a special business model of responsible business conduct — a sustainable banking model. A separate section is devoted to an analysis of the situation in the area in question and identification of measures to enhance the role of banks in ensuring responsible financing in Russia.

Development of the Long-Term Investment Market: Modern Transformations in the National Mechanism for Economic Growth Financing

The economic growth and its sustainability depend on volumes and dynamics of long-term investments that require careful forecast of the future. Therefore, the paper analyzes the development of long-term investment financing in Russia in 2016–2018. The relevance of the research stems from the need to seek new and develop existing sources of funding the economic growth in Russia. The subject of the research is a set of measures implemented in the framework of the national financial market development plan, compared with recommendations of global level institutional investors related to long-term investment financing. The purpose of the research was to formulate proposals on how to introduce global management recommendations into the national financial regulation practice and offer a set of actions to national governments to support long-term investment by institutional investors. Based on the research findings, it is concluded that the priority in the Russian financial policy should be given to decisions towards overcoming national development problems rather than to decisions aimed at harmonization of relations in the investment sphere and creation of favorable conditions for foreign institutional investors. It has been stated that the main criterion for making a financial decision in the Russian Federation should be development level achieved, challenges facing society as well as available resources and opportunities, including the tolerance (or intolerance) level of the international environment. This position is currently demonstrated by the national financial regulator.

Modern Status of Accounting Reporting and Possibility of Its Acceptance Based on Managerial Decisions

The present state of accounting (financial) reporting is considered in this paper. The paper analyzes the balance sheet data for making managerial decisions. The measures for the reform of accounting stipulated by the Plan of the Ministry of Finance of Russia for 2017-2019 on development of accounting and reporting in the Russian Federation on the basis of IFRS are considered. It is concluded that Russia has chosen one of the most rational ways of applying international financial reporting standards - their adaptation, which involves the gradual improvement of Russian reporting rules.

THE FISCAL AND ECONOMIC POLICY OF THE RUSSIAN MINISTER OF FINANCE S. Y. VITTE AND CRITICISM OF IT FROM S. F. SHARAPOV (XIX – BEGINNING OF XX CENTURY)

Introduction. In 1842 Russian Finance Ministry was leaded by S. Y. Vitte. On his initiative serious economic reforms were carried out: the implementation of monetary reform, the construction of Siberian railway line and the adoption of the new statutes of the State Bank. However, the fiscal and monetary policy of S. Y. Vitte had its supporters as well as its opponents. Among those who were against the measures taken by S. Y. Vitte a well known (in those days) economist and publicist S. F. Sharapov, who especially defended the rights of the peasantry and argued that the development of Russian economy was different from the way of Eastern Europe. Materias and Methods. Despite many publications on this topic there has not been yet full research on the reorganizations undertaken by S. Y. Vitte and the alternative models put forward by his opponents and which specific direction of the fiscal and monetary policy were criticized. The aim of the given article is the analysis of the major reforms made by S. Y. Vitte, the critique on the part of his adversaries and familiarizing with the alternative suggestions. One can best understand it on the economic activity of S. F. Sharapov, who was the main opponent of most of the reorganizations. Results and Discussion. Among the main directions of the policy carried out by Finance Ministry in 1892–1903 one can single out the following: the preparation and implementation of monetary reform, which became the cornerstone of Vitte economic policy and the construction of railroads. Monetary reform was conducted gradually during 1895–1897. At the moment of its preparation S. F. Sharapov severely criticized the fiscal policy carried out by S. Y. Vitte. Unlike the supporters of the metal money circulation, he considered that the basis of the monetary system of Russia must be a paper rouble, which was pegged neither to gold nor to silver. S. F. Sharapov also came out against the wide range of the construction of railroads. In spite of the popularity of his ideas in the Russian society S. F. Sharapov did not get the support of the representatives of the main socio-political tendencies. There turned out to be more supporters of monetary reform and economic reorganizations. Conclusion. As for the monetary reform – the most important event in the activity of S. Y. Vitte – there is still a difference of opinion who was right: the supporters of introducing gold standard in Russia or its opponents “the nominalists” remains an open question. In 1898 summing up the results of the economic reform S. Y. Vitte ascertained that “money supply in Russia has been put to order and has been performing as soundly as in those states, where this branch of economy has long been in perfect order”. Subsequent events confirmed that “the nominalists” might have been right. Nowadays world monetary systems do not foresee the exchange of monetary units for gold and currencies are not pegged at the exchange rate of gold. The era of gold standard has come to an end and at present exchange rates and the stability of a monetary unit of this or that country depend on the state of the economy of this country. As far as railroad construction is concerned it should justly be noted, that a great deal of railroads as well as the construction of factories and plants in the whole world has caused damage to the environment as was foretold by S. F. Sharapov. Yet, when the territory of Russia was covered by rail network it resulted in a transfer of economic and cultural centres – cities through which railroads were laid began to develop rapidly and the cities without railroad connection started falling into decay. Thus Russia changed greatly.

Consumer finance in Russia: Income shocks and consumption smoothing

On the basis of the Russian Survey of Household Finance , we investigate the consumption behavior of Russian households, who faced a negative income shock at the end of 2014. We also analyze the role of crisis-adjusting consumption strategies based on the instruments of financial market, namely an increase in the stock of debt or decrease in liquid and non-liquid assets. Results based on two identification procedures of income shocks show that Russian households were able to smooth around 50% of their income shock. The ability to smooth consumption is lower for those living in rural areas, households with higher levels of debt accumulated before 2014 and those with lower income. Overall, Russian households are not used to spend savings or increase their debt in response to the income changes with the exception of those who already had a higher level of debt by 2014. The results may have important implications for the Bank of Russia policy.

A methodology to evaluate the efficiency of public health financing in Russia

A methodology to evaluate the efficiency of public health financing in Russia

Development of Islamic Banking in Russia Based on the Example of LLC Financial House Amal

The article considers the development of Islamic banking in Russia using the example of the Islamic financial organization Financial House Amal. Islamic investment treaties and tools used in Financial House Amal have been analyzed. The basic concepts and tasks of the Accounting and Audit Organization for Islamic Financial Institutions (AAOIFI) have been considered. The main conclusions on the introduction of Islamic finance in Russia have been proposed.

ТЕОРЕТИЧНІ ІДЕЇ ТА ПРАКТИЧНА ДІЯЛЬНІСТЬ ДЕРЖАВНИХ ДІЯЧІВ РОСІЙСЬКОЇ ІМПЕРІЇ ПОЧАТКУ ХІХ СТОЛІТТЯ У СФЕРІ ФІНАНСОВОГО УПРАВЛІННЯ

The article analyzes the activity of the renowned figures of Russian finance at the beginning of the nineteenth century – Mikhail Mikhailovich Speranskiy and Mikhail Andriyovych Baludianskiy, who significantly influenced the organization of activities of the national government bodies and, specifically, the ministers of finance, and also influenced the definition of the tax policy of the state, the main financial document of the state – the description of revenues and expenditures (budget) of the Russian Empire in general and the formation of the structure of the revenue and expenditure parts of the budget in particular, as well as measures to overcome the budget deficit and the actual implementation of the planned budget indicators. In preparing of the study, the author aimed to determine the main ideas of state figures M. M. Speranskiy and M.A. Baludianskiy to improve the financial management in the Russian Empire and to analyze how these ideas were implemented in the budget process during 1810 – 1814. The main program of M. M. Speranskiy and M. A. Baludianskiy was known as the “Finance Plan” that consisted of two parts: the budget planning of 1810 and the planning of the state budget for subsequent years. At the same time, the innovation of the strategy and its main content consisted in refusing of assignation ruble, expenditure reduction, establishment of control over the state expenditures and introducing new taxes. The reform of financial management took place in the process of general changes in the system of central and executive power, which were as follows: the establishment of a state council, creation of state control, optimization of the structure of distribution of ministries and their internal structure, change in distribution of the official duties of ministers and their subordinates. The theoretical ideas and practical activity of such state figures, as M. M. Speranskiy and M. A. Baludianskiy, occupy an important place in the history of financial management of the Russian Empire. The reforms conducted by M. M. Speranskiy and M. A. Baludianskiy gave the idea of putting the legal foundation under the process of annual approval of the budget and granting the status of state law. Besides, these ideas declared the public and civilized norms of public finance management of that time, strict control over the planned expenditures and revenues of agencies, a single budget classification of revenues and expenditures for budgets of all levels. During the first two years of the reforms at the expense of higher taxes, the authors of the reform managed to increase the revenue part of the budget and substantially reduce its deficit. However, these theoretical and practical achievements of the reformers were not fully implemented in the early nineteenth century because of the constant participation of the Russian Empire in military campaigns, which led to an uncontrolled growth of military budgets, as well as through bureaucratic corruption and due to the elemental non-enforcement orders of the central government.

THE ENCOURAGEMENT AND SUPPORT OF EXPORT INDUSTRIES AND SMALL AND MEDIUM BUSINESS IN RUSSIA AND ABROAD

Today, export promotion and support is an integral part of the trade policy of developed countries, where there is a developed system of state support and promotion of national exports, the effectiveness of which has been repeatedly proven in practice. Awareness of the need to form a unified system of state institutions that provide various non-financial and financial services to participants in foreign economic activity is the main result of state support for exports to Russia over the past few years. Thus, the creation of the Russian Agency for export credit and investment insurance was the initial stage of the Russian Government on the way to creating a single integrated system that will ensure and support the development of export activities in Russia both at the national level and at the level of economic sectors, as well as individual industries. At the moment, various government agencies are engaged in export procedures. The ministries of industry and trade are in charge of subsidizing the interest rate on export contracts, as well as issuing licenses for export operations. The Ministry of economic development of Russia commands the activities of trade missions. The Ministry of Finance of Russia provides state guarantees. The Federal customs service monitors customs clearance of foreign trade transactions, and the Ministry of Finance is responsible for providing state guarantees. In addition to financial and insurance support, Russian entrepreneurs-exporters need to support their foreign economic projects in political terms. In this area, intergovernmental commissions are of great importance, which are aimed at solving tax, property, transport problems, as well as expanding investment cooperation.

«Я дерусь со всеми, которые, не так поступают, как Коммунисту следует…». Письмо Ф. А. Земита Н. Н. Крестинскому о финансовой работе в Сибири. 5 января 1920 г.

The article offers a source study of the letter of the head of the Financial Department at the Siberian Revolutionary Committee F. A. Zemit to the People's Commissar of Finance of the RSFSR N. N. Krestinsky. Its text analysis clears up the issue of creation of Soviet regional governing bodies in the financial–economical sphere in Siberia at the final stage of the Civil War. The published source allows to outline major impediment to restoration of the Soviet finance system in Siberia after the Civil War: shortage of financial workers, their low professional qualifications, lack of regulatory documentation for organizing activities, etc. Key methods used in the study are biographical and problematic/chronological. Biographical method allows to interpret the document and to link it with professional activities of F. A. Zemit in Omsk. The problematic/chronological method allows to trace the developments in regional finance and to understand their causes by placing them into historical framework. The letter was written by F. A. Zemit in early January 1920 – at a most difficult time in his career in Siberia. The author considers this ego-document unique and revealing in its way. On the one hand, it is an official appeal of an inferior financial manager to the head of the People's Commissariat of Finance; its content is practical and no-nonsense. On the other hand, its style indicates a warm friendly and trusting relationship between the sender and the addressee; F. A. Zemit was, apparently, able to report personally to the People's Commissar of Finance of the RSFSR on the difficult situation in the region and to do so with great frankness. This publication may be of interest to scholars in history of Russian finance, Russia Civil War, Soviet society, and Siberia of the period.

Venture Financing in Russia, Exits and Initial Public Offering Performance

Venture Financing in Russia, Exits and Initial Public Offering Performance

Tendencies and Prospects of Public-Private Partnership Development in the Field of Physical Culture and Sport

Attraction of supplementary sources of funding into the sphere of the physical culture and sport (PhCS) is an acute issue in the Russian economy as well as in the countries with higher economic potential. In this connection, the authors of the article consider the public-private partnership (PPP) to be a perspective form of cooperation between the state and the private sector in the aspect of financing of the PhCS development. The article provides the statistic data on the PhCS financing and examines the options of investment return by the private partner that depend on the concrete scheme of the PPP project implementation: further exploitation of the object by the public or the private partner. The authors of the article summarize the foreign experience in the field of support and implementation of the PPP projects in the sports industry and suggest adopting the most effective, tried models of financing, that would allow making comparative evaluation and revision of the current practice of the project financing in Russia, and furthermore would lead to diversification of the services rendered.

Regional Finance in Russia

Condition and development of regional finances is the most important factor, defining the system of public administration in Russia at the regional level, its effectiveness. Practically all the managerial decisions, being made by the bodies of state power of the subject of the Russian Federation, demand financial provision.

""""""""""" . (Prospects of Development of the Industry of 'Islamic' Finance in the Russian Federation. Main Obstackless and Suggestions to Overcome Them)

Russian Abstract: В работе рассматриваются вопросы внедрения модели исламских финансов в практику российского финансового рынка. Исследованы причины опережающего роста исламских финансов в современном мире, зарубежный опыт по формированию сегментов исламских финансов в различных странах мира, как мусульманских, так и немусульманских. Анализируются основные препятствия, формулируются принципиальные варианты по их преодолению и делаются предложения по выбору оптимального варианта. Даются оценки социально-экономических эффектов от внедрения исламских финансов в России. English Abstract: The paper deals with the introduction of Islamic finance model in the practice of the Russian financial market. The reasons of advancing growth of Islamic finance in the modern world, international experience on the formation of Islamic finance segments in various countries around the world, both Muslim and non-Muslim. Analyzes the main obstacles are formulated basic options to overcome them and made suggestions on the choice of the optimal variant. Estimates of the socio-economic effects of the introduction of Islamic finance in Russia.

Система внутреннего контроля: теоретический аспект построения и функционирования

According to the Federal Law «On Accounting» about the need to control the internal facts of economic life, and in the absence of legal documents on the organization of internal control the article analyses certain provisions of the Russian Finance Ministry information document in detail from 26.12.2013 № PP-11/2013, considered the application of legislation in this area.

Interest-free financing: problems and challenges

The article reveals problems and challenges of interest-free financing in Russia. Actually, in this respect, the experience of the Gulf countries plays the important role. Improvement of the financial institutions regulation will contribute to the development of partnership infrastructure. The study contains recommendations, aimed at interest-free equity financing and international experience implementation within the activity of economic entities

PARTICIPATORY FINANCING AS A FACTOR OF DEVELOPMENT

The article describes the prospects for participatory financing in Russia and the expediency of supporting the activities of specialized financial institutions to develop the national economy. In this context, the experience of European countries, Malaysia, the Gulf countries plays an important role. In modern conditions, the international financial and economic crisis and increased competition for sources of raw materials and for goods and services markets demonstrate the vulnerability of the world economy, its imperfections and stress the need for the use of new tools and less risky sources of financing. The article explains the need for improved regulation in the area of participatory financing, gives recommendations for the development of appropriate infrastructure and the use of world experience. The Federal Law “On financial partner organization” recently introduced to the legal framework meets regulatory principles of traditional banking business, expands working areas of specialized financial institutions and will contribute to the economic development of Russia.