Russian Financial Research Articles

Dynamic spillovers of various uncertainties to Russian financial stress: Evidence from quantile dependency and frequency connectedness approaches

Being geopolitically exposed, the Russian financial sector is vulnerable to various ­uncertainties. The aim of the article is to examine the quantile movements and dynamic connectedness of uncertainty indices with the financial stress index of Russia employing the cross-quantilogram (CQ), recursive cross-quantilogram (R-CQ) and TVP‑VAR dynamic connectedness using monthly data from July 2011 to August 2023. It is found that for Tweeter-based Economic Uncertainty (TEU) and Global Economic Policy Uncertainty (GEPU), there is strong positive dependence on the Russian Financial Stress Index (RFSI) in the bearish states of market in the initial memory, and the strength of this positive spillover effect gradually wilts towards longer memory structures. Unlike the GEPU, Russian Economic Policy Uncertainty (REPU) has long-lasting heterogeneous spillover effects on RFSI. Though there are significant positive, as well as negative, spillover ­effects of Global Geopolitical Risk (GGPR) on RFSI in the initial memory, across the longer­ memory structures these entire heterogeneous effects wash out. However, Russian Geopolitical Risk (RGPR) have long-lasting heterogeneous spillover effects on RFSI, unlike GGPR. GEPU, GGPR and RGPR were the net transmitters while RFSI, TEU and REPU were net receivers of volatility shocks. Since RFSI shows resilience over the long-term horizon to global geopolitics and economic uncertainty, investors are advised to keep patience and hold their capital/investment up to a minimum of 1 year in Russian financial system in order to be rewarded with positive returns.

The Current State of the Russian Financial System: New Vectors of Legal Regulation of the Financial Market

The scientific work is devoted to the current state of the Russian financial system. The first part of the study provides empirical data on budget revenues and expenditures as a macro-legal institution in characterizing the state of the Russian financial system. In the second part — new vectors of legal regulation of the financial market — an attempt is made to resolve the academic dispute about the core consolidation of state and municipal borrowing from the position of goal-setting of the financial market.

Impact of Oil Price Shocks on Crypto and Conventional Financial Assets during Financial Crises: Evidence from the Russian Financial Market

Impact of Oil Price Shocks on Crypto and Conventional Financial Assets during Financial Crises: Evidence from the Russian Financial Market

Criminological Research of the Russian Financial Market as an Object of Criminological Research

Criminological Research of the Russian Financial Market as an Object of Criminological Research

Statistical Study of the Russian Financial System under Sanctions

Purpose of the study. The imposition of sanctions on the financial sector and suspending relations with international financial institutions in 2022 has significantly affected the external conditions for the development of the domestic financial sector, caused an increase in geopolitical tensions and instability in the Russian currency market. It is necessary to study and understand the processes currently taking place in the financial market. The article is devoted to the statistical assessment of the impact of sanctions on the Russian financial system in 2022 and 2023. The purpose of research paper is to identify the situation on the currency, money and credit, debt market, as well as in the budgetary sphere, to assess the relationship between the dynamics of key financial indexes in the sanctions crisis. Materials and methods. The sources of information for the calculations were official data from the Ministry of Finance of the Russian Federation, the Bank of Russia, the provider of data on financial markets Cbonds and PJSC “Moscow Exchange”. The article used statistical methods of analysis: variations, dynamics, hypothesis testing. Determination of anomalous levels of the time series was carried out using the Irwin method. Differences in average federal budget indexes were assessed using the Wilcoxon Matched Pairs Test. The dependence of the dynamics of the main financial indexes was assessed on the basis of time series correlation. Results. The study allowed us to conclude that 2022 was a critical year for the Russian financial system. All its sectors were affected by sanctions restrictions. The weakening of the national currency was revealed in the currency market, and it was found that the dollar exchange rate in 2023 was abnormally high for the period from 2000 to 2023. The budget sector hasdemonstrated stability. The results of the study showed that the sanctions pressure did not affect the revenue part of the federal budget. However, the average monthly expenditure of the federal budget increased statistically significantly by almost three times in 2022. The monetary market reacted with an excessive supply of money. The increase in the money supply has reached its highest value in the last 10 years. The money supply growth was accompanied by changes in its structure. The banking sector showed the development of the credit growth trend. The debt market reacted with a rapid growth of corporate bonds volume, the highest for the last 10 years. And the market of federal loan bonds was characterized by a rapid reduction in the volume of federal loan bonds owned by non-residents and a decrease in the share of non-residents. The interrelation between the dynamics of the US dollar exchange rate and the volume of corporate lending associated with the conversion of loans in US dollars and euros into yuan was revealed. Direct interrelation was observed in the dynamics of money supply and the volume of corporate bonds and federal loan bonds market. Conclusion. The financial system is adapting to new circumstances. The transformation of methods and tools of financial regulation accompany this process. This process requires studying and understanding changes in the composition, dynamics, and interconnection of the structural elements of the financial system, as well as finding ways for its development.

Возможности и потенциальные риски экосистемы DeFi

The prospects for the widespread introduction of decentralized finance into global financial markets are analyzed. The aim of the study is to consider the opportunities provided to users and investors by the DeFi ecosystem (decentralized finance), and the potential risks of implementing services, applications, protocols based on decentralized financial instruments in both foreign and Russian financial markets. With the help of the theoretical (analysis, synthesis, abstraction) and empirical (comparison, observation) research methods, opinions of leading domestic and foreign experts on the innovative capabilities of DeFi are presented. Based on up-to-date statistical data from the innovative dApps – DappRadar platform, analytical reviews, conference reports, public speeches and expert interviews, initiatives of the main financial regulator of the United States – The United States Securities and Exchange Commission (The United States Securities and Exchange Commission), the Commodity Futures Trading Commission (CFTC), and the Russian Financial Action Task Force (FATF) group for the development of financial measures to combat money laundering, the author emphasizes the need to implement a regulatory framework to settle the spread of decentralized finance. The resulting conclusions are the inclusion of digital assets in the “anti-money laundering” legislation of Russia, as well as a number of other measures aimed at bringing regulatory clarity to the sphere of DeFi initiatives. The main conclusion of the study highlights the difficulties in the large-scale spread of decentralized finance, which is justified by the direct impact of potential risks of using it, distributed by the author to a number of system groups. As a promising predictive model for the development of DeFi, the author proposes a safe harbor model for tokens developed by Hester Peirce. The relevance and scientific novelty of the research are justified by the possibility of using the achieved results (including in the field of analyzing initiatives recommended by large regulatory institutions in relation to uncontrolled financial markets) to introduce a transparent, open, reliable ecosystem of decentralized finance.

Dynamic Connectedness between Crypto and Conventional Financial Assets: Novel Findings from Russian Financial Market

In the dynamic landscape of the Russian digital economy and increasing financial openness, crypto assets have emerged as influential players in the financial market. The geopolitical and economic developments after a conflict with Ukraine have presented formidable challenges in the shape of financial and trade sanctions, coupled with the suspension from the SWIFT banking system, has plunged the Russian economy into a precarious situation. The current study delves into the network spillover effects between a prominent crypto asset and various financial assets including equity, exchange rates, crude oil, gold, and commodity futures using daily data from January 01, 2018, to August 31, 2023. The purpose of the study is to provide empirical and theoretical insights into countering the impact of sanctions on Russia, proposing a pragmatic solution for the Russian financial market. The research methodology involves the application of network spillover estimation and value-at-risk analysis. Notably, the findings expose a robust association between crypto and financial assets, where crypto assets play a pivotal role in transmitting risk within the financial landscape. While their impact on other financial assets remains relatively subdued, short-term correlations exhibit volatile fluctuations, often marked by sharp increases in downside risk. Theoretical implications follow the portfolio theory of asset pricing, with extreme risk spillover originating from long-run fluctuations in the crypto market, impacting market sentiment and elevating risk propagation in the Russian financial market. These results carry practical significance for payment and receipt processes, as well as trading activities with foreign countries, presenting essential insights for policymakers and investment decision-makers.

Genesis of the Russian Financial System and Ways of Its Transformation: Soviet and Modern Periods

The financial system is derived from the economic model of society. The purpose of our research is to develop the scientific foundations of the genesis of the Russian financial system, allowing us to determine the conditions, causes, factors and elements that can form scientific and practical proposals for its further development, taking into account the current political and economic situation. The Russian financial system has gone through several stages of development: catch-up development finance, war communism finance, new economic policy finance, Soviet finance, neoliberal and globalist finance, national finance. At each of these stages, fundamental changes occurred both in the financial system itself and in its elements. In theory and practice, there is high theoretical, methodological and methodological uncertainty regarding the elements of the financial system. In this context, their study from a historical perspective is relevant. It is proposed to highlight the following main elements: national currency, payment system, monetary relations, tax system, banking system, insurance system, mortgage system, public finance, securities market, mutual investment funds and non-state pension funds, exchange trading, existence of relationships with international finance. The research methodology is based on a theoretical analysis of the basic scientific principles of the formation of the financial system and its elements. The information and empirical basis for the study were scientific research, statistical data, and analytical reviews. The object of observation is the Russian financial system for the period 1928 to the present. The scientific novelty lies in the formation of the author's conceptual approach to the financial system and its elements, and the imperatives for the emergence of economic problems caused by the underdevelopment of the financial system are identified. The study showed the need to further improve the elements of the financial system to ensure economic growth and development.

Genesis of the Russian Financial System and the Ways of its Transformation: the Period Before 1928

The life of modern human society is impossible without an effective economic model. In turn, functioning economies are ensured by the financial system of society. The purpose of this scientific research is to formulate a scientific approach to the development of the domestic financial system, which, unlike most foreign ones, has gone through stages of a complete change in the current paradigm. The Russian financial system has gone through mutually exclusive stages of development: finance of catch-up development, finance of war communism, finance of the new economic policy, Soviet finance, neoliberal and globalist finance, national finance. Each of these stages reflects fundamental changes in the methods and methods of management, which could not but affect the elements of the financial system. In financial theory and practice, there is high theoretical, methodological and methodological uncertainty regarding the elements of the financial system. In this context, their study from a historical perspective is relevant. It is proposed to highlight the following main elements: national currency, payment system, monetary relations, tax system, banking system, insurance system, mortgage system, public finance, securities market, mutual investment funds and non-state pension funds, exchange trading, existence of relationships with international finance. The research methodology is based on a theoretical analysis of the basic scientific principles of the formation of the financial system and its elements. The informational and empirical basis for the research was scientific research by Russian and foreign scientists, data from state and corporate statistics, and information and analytical reviews. The object of observation is the Russian financial system before 1928. The scientific novelty lies in the formation of the author's conceptual approach to the financial system and its elements, and the imperatives for the emergence of economic problems caused by the underdevelopment of the financial system are identified. The study showed the need to further improve the elements of the financial system to ensure economic growth and development.

Russian Financial Market in 2022

Russian Financial Market in 2022

US and Russian Financial Markets: Comparative Analysis

US and Russian Financial Markets: Comparative Analysis

Измерение стартового уровня и оценка стартовых факторов финансовой грамотности студентов профтехобразования (на примере Смоленского техникума отраслевых технологий)

Modern realities of life dictate the need for graduates of secondary vocational education to have not only professional competencies, but also to be functionally literate. Financial literacy is one of the components of functional literacy. The purpose of the work is to determine the starting level of financial literacy of students of the Smolensk College of Industrial Technologies and compare it with the national indicators, as well as to assess the starting factors of students' financial literacy. Materials and methods. When developing the materials of the diagnostic study, the open international methodology for measuring the level of financial literacy of the Organization for Economic Cooperation and Development in 2018 was taken as a basis, and the Unified Framework of Financial Literacy competencies for students aged 15-18 was also taken into account. The toolkit developed on the basis of these methods consists of three blocks – “financial knowledge” (17 points), “financial skills” (17 points) and “financial attitudes” (16 points). To achieve the target of the Russian Financial Literacy Index, which is 57%, respondents needed to score 28.5 points. The results of the study showed that the threshold of 28.5 points was not reached. The average score was 18.6 points, which is 37%. In part, the low performance of college students can be explained by starting factors – lack of financial experience, low starting level of general education, low motivation to study, peculiarities of social and economic status. Conclusions. The task of the secondary vocational education system is to increase the level of financial literacy of students. The introduction of elements of financial literacy into curricula and programs must necessarily take into account the specifics of students. It is necessary to focus not only on age characteristics, but also on the starting factors of the target audience

The Impact of the Sanctions Policy of Unfriendly Countries on the Russian Financial System

In the context of unprecedented sanctions pressure, the author examined the current situation in Russian financial system analyzing the reasons for the current trends in the growth of public finances against the backdrop of a low growth in gross domestic product. The study identified main directions taken at the state level and discussed their consequences. The measures are the following: introduction of a financial policy to combat the «Dutch disease»; maximum openness of the Russian financial system for international finance; active policy of borrowing in international financial markets; improvement of tax administration and concentration of financial resources of budget organizations in the treasury system; development of a system to stimulate the demand of individuals, which forms «long money» in the economy and the consumer behavior of the population; formation of a financial center in Moscow; and imbalance of regional budgets. The aim of the study was to examine the financing of the regional economy in the context of EU and Anglo-Saxon sanctions. The author highlighted two unresolved problems: underestimation of the role of finance in economic growth and development of the regions and the problem of direct link of finance and reproduction. The paper analyzed the impact of sanctions against Russia on the functioning of the country's financial system as a whole and on the factors of production. The study revealed that a significant adjustment of the scientific paradigm of financing at the state and sub-federal levels is necessary to ensure economic growth and development of Russia.

The Typology of The Global Financial Crisis and the Solution in Islamic Economic Perspective

Economic globalization has triggered more frequent financial crises. Financial crises constantly repeat every specific time. This article reviews the typology of the global financial crisis and the solutions offered by Islamic economics. The research uses a historical approach. Five typologies of the global financial crisis, namely: Speculative bubbles and Crash, Sovereign Default, Balance of payment crisis, systemic banking crisis, and Energy Crisis. The financial crisis typologies of Speculative bubbles and Crash are the Wall Street Crash of 1929 and the Great Depression, Black Monday, Japanese Asset Bubble, Dot-com Bubble, US Saving & Loan Crisis, and the Suprime Mortgage Crisis. The financial crisis typology of Sovereign Default is the Latin American Debt Crisis, the Mexican Peso Crisis, the Asian Financial Crisis, and the European Crisis. The typology of financial crisis Balance of payment crisis is the Mexican Peso Crisis and the Russian Financial Crisis. The financial typology of the energy crisis is the oil crisis. Islamic economics offers a solution so that the financial crisis does not recur in the future. The prohibition of riba, maysir and ghaarar transactions offers a solution to the financial crisis typology of Speculative bubbles and Crash. The principle of equity financing in Islamic economics is a solution to the financial crisis of the Sovereign Default typology. Islamic economics prioritizes the financial sector, which is in line with the real sector as a solution to the financial crisis typology of the Balance of payment crisis. The value of morality (akhlakul karimah) is a solution to the financial crisis because of the moral hazard.

Institutional Structure of the Russian Financial Market: The Need for Regulatory Transformation

The article analyzes the current state of the Russian financial market’s institutional structure. The main variants of activity combinations of its participants allowed by the law are described. Based on a comparison of the advantages and risks arising from the combination of different areas of work by market participants, proposals are formed to adjust the regulatory requirements for permissible combinations of activities. The purpose of the changes put forward is to increase the efficiency of financial resource redistribution, which, in turn, will provide financing for economic growth of the Russian Federation. It is proposed to consolidate the division of activities of financial market participants into two categories. The first one is systemically important; such organizations should be controlled by the state directly or through a chain of owners. The other one is the rest of the organizations, for which the opportunities for simultaneous work in a large number of areas can be expanded under such conditions. When fully state-controlled companies perform the functions of an exchange, a central depository, a clearing organization and a central counterparty, it seems that the rest of the market participants, without creating significant risks for the market, will be able to combine work in the securities market using their own and clients’ funds, operation as a credit and deposit intermediary or an investment and financial platform, and work in the foreign exchange market and the digital asset market. Improving the efficiency of the financial market may be instrumental in providing the projects and production with the financial resources.

US and Russian Financial markets: comparative analysis

This article provides an analytic interpretation of the U.S. financial market development and identifies important mechanism of this market. Debt securities can spur economic growth but may also pose risks to financial stability and macroeconomic performance. US private financial sector debt increased during the COVID-19 pandemic, spotlighting the role of debt in supporting economic activity as well as the associated risks. This article covers the major trends and institutions of modern U.S. financial market. The current operating system of the American money market is being analyzed. The primary instruments of U.S. financial market are corporate and government debt securities. The major participants of American financial market are commercial and investment banks, securities firms, asset management companies, hedge funds, insurance companies, pension funds, stock and futures exchanges, credit rating agencies as well as regulatory and other public authorities. For the last decade the volume of U.S. debt securities market has increased and the structure of this market transformed. Pension funds play the leading role in US financial sector, and positions of commercial banks are decreasing. U.S. positions in global financial markets is being analyzed. Section 2 reviews the major effects of western sanctions on Russian financial market. Most foreign investors left Russian market in 2022. So the major result of western sanctions was depreciation of Russian corporate debt securities. But when special military operation will be finished the situation is likely to improve, because Russian debt securities have potential to grow. The article covers theoretical approaches to the problem of development of financial markets. Major economic drawbacks of the current financial systems are being discussed.

Green Factor Influence on the Yield of Stocks and Bonds in the Russian Financial Market

Green Factor Influence on the Yield of Stocks and Bonds in the Russian Financial Market

Исследование оценочных обязательств при проведении аудита бухгалтерской (финансовой) отчетности

The article discusses the estimated liabilities, their study and assessment in accordance with the provisions of Russian accounting standards (RAS) and International Financial Reporting Standards (IFRS).

The Russian Financial Market

In 2020, after the sudden financial shock in March caused by sales of risky assets by investors against the backdrop of the rising coronavirus pandemic, stock markets in many countries recovered faster than did the economic indicators. The traditional hypothesis that the value of financial assets depends more strongly on future investor expectations than on past events has been confirmed.

The Impact of International Sanctions on Russian Financial Markets

Russia’s international comportment and geostrategic moves, particularly the invasion of Ukraine and the annexation of Crimea in 2014, caused a substantial change in its international economic and political relations. In response to Russia’s invasion, the United States of America, the European Union, and their allies imposed a series of sanctions. In this study, by applying an exponential generalized autoregressive conditional heteroscedasticity model to daily logarithmic returns of the ruble exchange rate and the closing price index of the Russian Trading System, we analyze how the returns and volatility of the exchange rate and the stock price index responded to the sanctions and oil price changes. The estimation results show that the sanctions have a significant positive short-term impact on exchange rate returns. Economic sanctions have a significant negative long-term impact on the returns and variance of the exchange rate and a significant positive long-term impact on the returns of the stock price index. Financial sanctions have a positive/negative long-term impact on the returns of the exchange rate/stock price index and a positive long-term impact on the variance of the exchange rate and the stock price index. Corporate sanctions have a positive long-term impact on exchange rate returns.