Bank Of Russia Research Articles

Banking System of the Russian Federation: Theoretical and Practical Issues of Ensuring the financial Sovereignty of the State

This work is devoted to two main issues: understanding the category of “sovereignty” and the role of the banking system in ensuring the financial sovereignty of Russia. Based on the analysis of doctrinal sources, including past historical eras, sovereignty is considered not only as a constitutional and legal institution, but as a general legal institution as a whole. The types of sovereignty presented in the literature are examined and the question is raised about the need to achieve terminological certainty, a conclusion is made about the possibility of the existence of only such an integral part of state sovereignty as economic, including financial sovereignty, which is understood as the financial security of the state from external and internal threats. The issues of ensuring financial sovereignty in relation to the functioning of the Russian banking system are explored. It is proposed to enshrine financial sovereignty in legislation as a principle — a norm of the banking system. It is stated that the condition for ensuring financial sovereignty is the resolution of a number of internal problems, which include the formation of trust in the banking system, financial fraud, and unfair practices. Important issues are building an effective banking system and systematizing banking legislation.

Digital transformation of the Russian banking sector: Main development trends

Digital transformation of the Russian banking sector: Main development trends

Testing Forecasting Properties of Different Approaches to Interval Forecasting (Using the Example of Inflation in Russia)

The paper contains the main results of the study of the quality of interval forecasts based on quantile regression and smooth quantile regression models relative to interval forecasts based on OLS models for Russian inflation. All models in the work were built from the logic of the possibility of forecasting in real-time, in connection with which the authors used inflation that was not cleared of seasonality in the expression month to the same month of the previous year. For each forecast horizon, the authors developed a separate model from lagged values of inflation and regressors so that the known values of lagged variables were always used on the right side of the equation.The authors tested a wide range of specifications – from very compact autoregressive models with one or two lags to wide ones with three additional regressors in addition to inflation lags. The best quality from the point of view of CRPS (Continuous Ranked Probability Score) metrics typical for such a task were the specifications that included the only additional variable – the USD/RUB exchange rate. As the confidence interval narrowed and at longer horizons, quantile and smooth quantile models became increasingly better relative to OLS models according to the CRPS metric.According to the authors, in the presence of inflation targeting, qualitative inflation forecasts can be used by the Bank of Russia in conducting monetary policy when forecasting future inflation dynamics and stress-testing the Russian economy. In general, this can help increase the economic agents’ confidence in the Bank of Russia within the concept of rational expectations

Prospects for the development of foreign economic activities of the Russia banking sector in China

Relevance. In modern conditions of economic uncertainty and difficulties of doing business in connection with the application of sanctions, banks need to look for effective tools and ways to increase the effectiveness of mutual cooperation with other states to overcome the prevailing circumstances. During the work, the main aspects of opening and functioning of a bank branch in China were considered, as well as competitors at both the macro and micro levels were analyzed. Based on the SWOT analysis, the paper identifies the strengths and weaknesses, opportunities and threats of introducing a branch of a Russian bank into the Chinese banking market. The study identifies promising regions for the development of foreign economic activity and forms a range of banking services that contribute to the sustainable development of the branch of the Russian bank in the foreign market.The purpose of the study is to substantiate the need to develop the foreign economic activity of a Russian commercial bank in China.Objectives: Based on a comprehensive analysis and acceptability of the Chinese banking services market, an assessment of the current state of PJSC Expobank, an analysis of competitors in the proposed region and the specifics of a specific location, to develop a plan for opening a bank branch in China.Methodology. The study is aimed at achieving this goal and is based on a review of scientific research by both domestic and foreign economists, as well as an analysis of a number of requirements for opening a bank branch in China.Results. In the course of the work, the process of opening a bank branch in China for carrying out activities was analyzed, the advantages and disadvantages of expanding the boundaries of presence were identified, and promising areas for starting foreign economic activity were proposed.Conclusions. The conducted research gives grounds to conclude that the expansion of the geographical presence in China will allow PJSC Expobank to gain access to world economic centers and expand the boundaries of its activities.

Анализ показателей российского финансового рынка

The financial market is a key factor in economic development, an important tool for the redistribution and transformation of investment resources, as well as a litmus test of the state's economic health. The peculiarity of the Russian financial market is its "youth" and "inexperience" in comparison with the markets of developed economies, the path of trial and error, inconsistency in the context of the uniqueness of the financial system of the Russian Federation. This market is particularly vulnerable and volatile in the face of sanctions and global economic turmoil, so it needs competent targeting guidance, effective tools and verified coordination methods and techniques. The fundamental problems of the Russian financial market are quite deep and do not always appear on the surface, which requires an in-depth and permanent tactical and strategic analysis of factors, causes, trends, trends and indicators that can correct the situation in a timely manner in any economic scenario in manual management. The article examines the main features, rallies, features and directions of the development of the financial market of the Russian Federation at the present stage. The analysis of the issuer's statements for 2005–2023, dividend payments for the same period is presented, the dynamics of growth of the segment of mutual funds and exchange-traded mutual funds is considered. A comparative structure of household financial assets in 2017 and 2023 is proposed, the share of different organizational and legal forms of joint-stock companies in the total number of joint-stock companies in 2019–2023, the share of different groups of banks in the value of assets of the Russian banking system in 2000–2023 is given. The final results of the study substantiate the importance of the role of the state as a regulator of the stock market, emphasize its Russian functions, and highlight its conceptual problems. The research is based on the analysis of foreign and Russian publications, as well as on statistical conclusions of financial and statistical data.

Assessing the impact of environmental component on the development of Russian banks applying ESG policy

Subject. The article discusses operations of steadily developing Russian banks in the context of environmental component. Objectives. The aim is to identify patterns in functioning of Russian banks, applying ESG policy in their activities, under the influence of environmental factors, to improve the management of their development. Methods. The study employs regression analysis. We selected 26 Russian banks based on ESG ratings, formed an empirical base for 2011–2020 from open sources (financial and economic indicators and macro-level indicators characterizing the environmental impact by the activities of economic entities), built a linear regression model in MS Excel. Results. The constructed regression model helped reveal that the indicator “Recycling and disposal of production and consumption waste in the Russian Federation” has a significant positive impact on the pretax profit of banks applying ESG policy. However, a negative trend in the impact of banks on the environment was identified in terms of connection between the resulting indicator and the indicator “Primary energy intensity level”. This suggests that the internal capacity of banks to implement the environmental component is not sufficiently developed and used. Conclusions. The findings can be used both at the macro and micro level when generating the strategy and tactics for ESG banking development. The offered regression modeling technique can be used to analyze the role of environmental component in the activities of banks in other countries, which implement ESG policy.

Issues of assessing the FinTech impact on the financial sector's structure

Subject. This article examines the areas of penetration of FinTech and the impact of the expansion of FinTech and BigTech companies on the structure of the financial sector. Objectives. The article aims to analyze the processes of the emergence of the FinTech phenomenon and its growing penetration into all spheres of finance, identify the consequences of these processes for the structure of the financial sector, as well as formulate the principles for the formation of a balanced structure of the financial sector in the context of its ongoing digitalization. Methods. For the study, I used the systems approach, comparative intermarket analysis, impact analysis of the technological component of economic development at the macro level. Results. The article reveals the main forms and manifestations of the impact of digitalization on the structure of the financial sector and the main activities and types of services of FinTech companies. The article also formulates the principles for the formation of a balanced competitive structure of the financial sector. Relevance. The results of the study can be used by the Bank of Russia and other national financial market regulators to improve approaches to building a modern competitive balanced financial structure.

Development of the market of digital financial assets in the context of ensuring financial sovereignty of Russia

Currently, in the context of limited external funding, the issues of forming the financial sovereignty of the country are becoming the subject of scientific discourse among Russian economists. The introduction of digital financial assets (DFA) into business practice and their legislative recognition largely ensures the expansion of investment opportunities for economic entities, which will contribute to the end of the stagnant macroeconomic shock of the period of 2021–2024. The work covers solving such scientific problems as clarifying the essential nature of DFA and developing their classification; assessing the process of functioning of the investment market based on the use of digital financial instruments; identifying key limitations in the functioning of the basic institutions regulating the DFA circulation. The authors proposed a clarified formulation of the economic category of digital financial assets, taking into account the peculiarities of its essential nature. An analysis of the functioning of the domestic DFA market is carried out. Among the factors hindering the development of the DFA market, its fragmentation, low liquidity, and weak institutional regulation of the issue and circulation of DFA are highlighted. The authors emphasize the positive effect of the development of the digital infrastructure of the market, in particular, the increase in the number of investment platforms licensed by the Bank of Russia, the reduction of costs of access to them, the development of a market-making system in the secondary market of digital financial assets. The authors believe that the leveling of the contradictions of the investment market should occur due to the improvement of the institutional environment in the field of strengthening control over transactions with digital financial assets, as well as ensuring their mandatory registration, which is absent at the present stage. The development of the domestic market of digital financial assets has significant potential due to, firstly, the desire of economic entities to replace traditional financial instruments with digital ones, which allow reducing significantly transaction and transformation costs; secondly, the expansion of investment opportunities for economic actors through the use of digital platforms and other elements of the digital ecosystem for the purpose of business development; thirdly, the transformation of the traditional business model, which provides for the transition from vertical interaction of entities to a network form of coordination of economic agents using decentralized financial instruments in their activities.

Financial therapy for the Russian economy

Subject. The article addresses the monetary policy, balance of payments of Russia, securities market. Objectives. The aim is to assess the investment potential of the Russian economy, the banking system stability. Methods. The study employs methods of statistical analysis. Results. The paper shows that in the Russian economy, investment financing sources exceed the costs of net acquisition of non-financial assets. Opportunities to attract foreign investment by the middle of 2023 were largely lost. At the same time, there is an exponential growth in debt on loans from the non-financial sector, and an increase in the volume of intraday loans provided by the Bank of Russia. Conclusions. The nature of monetary policy is critical for Russia's economic development in the face of international sanctions.

BUSINESS CLIMATE INDEX. CALCULATION OF BUSINESS CLIMATE INDEX FOR SMALL AND MEDIUM ENTERPRISES AND LARGE BUSINESSES

The article discusses the use of business activity indicators, based on data from the monthly monitoring of enterprises conducted by the Bank of Russia. It considers the indicators of the business climate, divided into large enterprises and small and medium-sized businesses, as these play an important role in the market economy and are more sensitive to crises but also more adaptive than larger businesses. Small and medium-sized business activity indices are in high demand among the business community, so the article focuses on this group of enterprises. General formulas for calculating the business climate indicator are provided by the Bank of Russia. Seasonally smoothed indicators of the business climate were analyzed and compared separately for large businesses and a group including small and medium-sized enterprises. Indicators were compared separately for small and medium enterprises, as well as within industries of small and medium businesses. The response of different groups and industries to economic changes, such as crises and structural transformations, was revealed. The business climate indicator for small and medium-sized companies was compared with the RSBI Support of Russia index. An alternative index was also created using the RSBI methodology, using monitoring data from the Bank of Russia. All calculated indices were compared, the level of correlation was checked, and they were compared with statistical data on small and medium enterprise turnover growth. The article explored the potential of using enterprise data to monitor and analyze the economy.

Понятие и правовая природа договора счета цифрового рубля

The article expresses the author’s opinion on the legal nature of the digital ruble account agreement, which appeared in legislation since July last year. The author substantiates the point of view that the digital ruble account agreement has two varieties, the legal nature of which is different. Firstly, a digital ruble account agreement concluded by the Bank of Russia with the user of the digital ruble platform, which is a type of bank account agreement. Secondly, a digital ruble account agreement concluded by the Bank of Russia with a participant in the digital ruble platform, which is a conglomerated mixed agreement. It includes two different contract types with a complete set of elements. The components of such a conglomerated agreement include, firstly, a bank account agreement (digital ruble account agreement), and, secondly, an agency agreement. Both of these agreements are interconnected by a single economic goal — to provide users with access to the digital ruble platform in order to carry out settlement transactions with digital rubles. Due to the lack of a legal definition of a digital ruble account agreement with a platform participant, the author has formulated her own definition of such agreement.

Момент заключения договора потребительского кредита

The article deals with the problem of determination of the moment of conclusion of a consumer credit agreement in comparison with a consumer loan agreement, and presents the results of the analysis of the conditions on the moment of conclusion of the agreement offered by Russian banks. The study showed that banks use both a consensual and a real contract model. The author answers the question of which model is acceptable.

Evaluating the effectiveness of developing financial culture of future economics teachers

Introduction. The article is devoted to initial teacher education for future Economics teachers with the focus on developing their financial culture, which contributes to effective interaction with society in various financial situations as well as to successful professional self-identification (increasing interest in obtaining professional knowledge, skills and abilities), and gaining experience in self-organization. The purpose of the study is to evaluate the effectiveness of the process of developing financial culture in future Economics teachers (theoretically and experimentally). Materials and Methods. The study was conducted as part of a pedagogical experiment. Evaluating the effectiveness of developing financial culture was based on the Strategy of improving financial Literacy and the formation of financial culture until 2030, International and Russian studies commissioned by the Bank of Russia, as well as the educational experience of training future Economics teachers. The analysis and generalization of the data obtained within the experimental work were carried out. The sample consisted of 102 undergraduate students studying the field of Vocational Education (43.04.03) and majoring in Economics and Management. The validity of the results obtained is confirmed by the International PISA-2018 research and the analysis of the Institute of the Public Opinion Foundation. Results. The analysis of scholarly and educational literature enabled the authors to clarify the concept of ‘financial culture’, to determine its nature and place in society. Therefore, we specify financial culture as the most important factor in the development of national sustainability. As part of the experimental work, the authors evaluated the effectiveness of developing financial culture in future Economics teachers. The research within the framework of the formative stage of the experiment showed a positive trend in the development of students’ financial culture. It was revealed that in order to develop students’ financial culture efficiently, it is necessary to adhere to certain conditions: pay great attention to the financial module, hold events within student associations, use the entire arsenal of modern educational techniques and procedures, systematically analyze the dynamics of the development of students’ financial culture, rely on official data from research centers in Russia and other countries. Conclusions. The results of the study prove that educational conditions justified and implemented in pedagogical universities ensure the effectiveness of developing financial literacy in future Economics teachers. The authors conclude that the development of financial culture can be considered to be the most important condition for students’ successful professional development.

Researching the possibilities of using digital financial instruments by future economists for sustainable development purposes

Introduction. The authors explore the problem of developing digital financial literacy as the most important characteristic feature of positive financial behavior in the context of the transition to the digital economy. The purpose of this article is to identify priorities and trends in using digital financial instruments by future economists for sustainable development purposes. Materials and Methods. The methodological basis of the study is the strategy of sustainable development, the ideological foundations of which determine the need for readiness to live and act in changing conditions, to plan socio-economic development taking into account the limitations of activities and the consequences of decisions made. The main method of the empirical part of the study is T. Saaty’s scale which was employed in order to identify global priorities in the use of digital financial instruments. A sociological survey was conducted among students of the Financial University under the Government of the Russian Federation, Omsk State University named after F.M. Dostoevsky, Omsk State Technical University, schoolchildren of specialized economics classes (Gymnasia 19, Omsk) to identify priorities and trends in the use of digital financial instruments by future economists, taking into account gender and age preferences. Results. The ideas about the level of awareness about the problem of developing digital financial literacy are systematized, explaining the relationship between digital and financial literacy from the point of view of the prospects of the socio-economic space. Global priorities of the use of digital financial instruments by respondents were identified: the general sample prefers to work with optimal combinations of 2 banking payment systems. Analysis of correlations by gender shows that male respondents are better than the sample at the range limits, and female respondents are in the middle. The interpretation of the answers characterizes the women’s choice as stable, middle options of behavior (2-3 cards), which are less risky. Men, on the contrary, consider risk as a challenge that encourages activity, and go to the border of the sample (1-4 cards). A similar trend is typical for the age groups between 17 and 20 years. This, on the one hand, is explained by the psychological peculiarities of gender, and on the other hand, by active advertising campaigns of digital sets of financial services offered by leading Russian banks. An assessment of students’ awareness of new models of the digital economy has been obtained, demonstrating a good correlation as respondents grow older, which determines the positive dynamics of digital financial literacy of future economists (1-4 year undergraduate students) in the light of current labor market trends. Conclusions. The results of the research confirm that active use of digital financial instruments determines affirmative dynamics of positive financial behavior of future economists for the purpose of sustainable socio-economic development.

FEATURES OF SUSTAINABLE DEVELOPMENT PRINCIPLES CONSOLIDATION IN RUSSIAN LAW

The purpose of the research. The article deals with the problems of reflecting the concept of sustainable development in the Russian legislation. The historical aspects of the formation of this concept in international law are studied, the role of the United Nations in its promotion and development is noted. The main normative legal acts of the Russian Federation reflecting the ideas of sustainable development are considered in order to analyze the nature of the provisions contained in them and assess their effectiveness. Conclusions. The study concluded that there is no single special normative act regulating relations in this area in the Russian Federation, as well as a limited number of sources of national law, generally affecting the issues of achieving sustainable development goals and ESG-agenda implementation. At the same time, a significant role of «soft law» acts (standards, industry recommendations, codes of corporate governance, etc.), which, despite their advisory nature, are important for closing the emerging gap in legal regulation in this area, was noted. Such acts are developed, in particular, by the Bank of Russia and Rosstandart within the limits of their authority, as well as within the framework of initiatives of business associations (primarily, the Russian Union of Industrialists and Entrepreneurs) to develop documents designed to ensure the implementation of sustainable development goals and objectives by business community members on a voluntary basis. Among the possible directions of the legislation improvement, it is proposed to get back to the development of the draft federal law «On Public Non-financial Reporting» taking into account the necessity to amend some of its provisions both in terms of the conceptual apparatus and in terms of fixing specific indicators of such reporting.

Diversification of the concept of foreign economic activity of russian banks in the new economic conditions Yulia S. Polozhentseva1

Relevance. Russian banks actively participate in international trade and economic relations. However, taking into account geopolitical and economic changes, such as sanctions and changes in trade blocs, banks need to develop strategies for effective expansion of their activities at the international level. Business planning for the geographical development of foreign trade will help banks to adapt to new market conditions, determine optimal strategies and resources for the development of export-import operations, as well as minimize risks and increase competitiveness on the world stage..The purpose is to conduct a comprehensive study of the possibilities of geographical development of the foreign economic activity of Russian banks..Objectives: analyze regional markets for their potential; to determine the main advantages and disadvantages of the activity of foreign trade of Russian banks; will identify the peculiarities of the bank's exit to the new dawn within the framework of foreign trade, draw up a business plan and determine the criteria for the success of the project.Methodology. In the process of research, general scientific methods of logical and statistical analysis, field research, as well as qualitative and quantitative analysis were used.Results. 10 Russian banks, their foreign trade development strategy and future prospects were considered. The regions in which the opening of a bank branch will be the most successful for foreign trade have been identified: Tatarstan, Primorsky Krai, Kaliningrad Oblast, Yekaterinburg. A business plan for entering a new regional market for a bank with a focus on foreign trade has been drawn up, taking into account industry specifics.Conclusion. The foreign trade development strategy allows banks to expand their client base, increase their global presence and provide their clients with access to international financial services.

Digital transformation of the Russian banking sector: Opportunities and risks

Digital transformation of the Russian banking sector: Opportunities and risks

Modeling the risk of bank default

This paper is devoted to modeling the probability of default of Russian banks in 2015–2020. There are relatively few studies on defaults of Russian banks after 2015, and our work intends to partly fill this gap. The purpose of this research is to determine the main variables which significantly impact the risk of default of Russian banks. The work seeks to identify additional factors associated with an increased risk of bank defaults during a relatively stable period of development of the Russian economy (2015–2020) without external shocks, such as COVID‑19 or international sanctions. We apply an integrated approach to modeling the risk of bank defaults. Empirical methodology is represented by logit and probit models, as well as Cox regression. The set of potential predictors for bank defaults include the variables, characterizing various aspects of credit institutions functioning (in accordance with the CAMELS system), as well as macroeconomic variables. The most significant predictors of default turn out to be the capital adequacy ratio N1, bank net assets, the ratio of total loans to assets and the size of secured loan portfolio. In general, the results we obtain are consistent with the CAMELS system of indicators assessing the sustainability of commercial banks, while the impact of macroeconomic indicators tends to be insignificant. The results of the study could be of interest to the regulator both for the purposes of ongoing monitoring of financial stability as well as for default risk prevention; to credit institutions which elaborate internal systems for monitoring their financial soundness; and to financial market participants to select the most stable companies in terms of investment and allocation of funds. Further directions of research are related to the inclusion of a crisis period into the analysis and comparing the set of significant predictors for bank defaults during a crisis and a stable period of economic development, as well as the use of alternative methods, in particular, machine learning algorithms.

Characteristics and Development Trends of the Digital Assets Segment in Modern Practice in Russia and Abroad

The paper aims to identify the key trends and risks associated with the introduction and spread of digital assets, including the digital ruble, in the Russian financial market. This study is timely due to the rapid growth of market capitalization for digital financial assets based on blockchain technology in both international and Russian financial markets, as more and more countries prepare to launch their own national digital currencies. However, there is a dearth of information in scientific and practical literature regarding the prospects, challenges, and risks associated with introducing digital financial assets, including the digital ruble, into Russia. The data for the analysis included official statistics and analytics from the Bank ofRussia and central banks of countries considering introducing digital national currencies. It also included the content of key Russian legislative acts related to digital currencies, as well as examples of the implementation of digital financial assets from Russian and international practices. The main research methods employed were a systematic approach, analysis of fundamental theoretical propositions in the literature, and case analysis. The paper discusses the existing types of digital financial assets, both internationally and in Russia, and assesses the demand for these assets in the Russian capital market, as well as their potential for lending to small and medium-sized businesses. It also considers the most common problems associated with the development of this segment and possible solutions, including regulatory measures. The second part ofthe paper explores the prospects and challenges of introducing a digital ruble into the Russian financial system. It assesses the potential impact of this new currency on the stability of domestic banks and monetary conditions in Russia, including inflation. Future research could focus on quantifying a wide range of risks associated with the introduction of digital financial assets, as well as modelling supply and demand for these assets.

Trends and prospects for the development of the derivatives market in Russia under sanctions

Aim. To analyze trends on the derivatives market in Russia under sanctions and identify prospects for its development.Objectives. To study the theoretical basis and functions of the derivatives market; to analyze its current state in Russia, to assess the impact of sanctions on the dynamics and structure of the derivatives market; to identify trends and determine scenarios for its development in the Russian state under sanctions; to develop recommendations to improve the efficiency and development of the derivatives market under external pressure.Methods. The author applied the methods of analysis, synthesis, generalization, comparison, analogy, historical analysis. The analysis of publications with the subsequent interpretation has been carried out, the results of research have been summarized, on the basis of which the author’s understanding of the derivatives market development trends has been derived. Comparison of the existing opinions concerning the considered problems was carried out, statistical data were investigated.Results. Under the conditions of sanctions Russian banks, financial organizations, exporters and importers faced restricted access to international markets, there were changes in demand, there were needs for new instruments. Sanctions contribute to the development and implementation of new instruments in the derivatives market. The main scientific result of the work is to identify effective approaches to the development of the derivatives market under external pressure. The results of the study can be used in the practice of financial institutions, banks and government agencies to develop strategies and development of operations with derivatives.Conclusions. The derivatives market plays an important role in the Russian economy, performing the functions of risk hedging, price formation and contributing to the predictability of financial flows, which is especially important in the conditions of sanctions pressure. An assessment of the current state of the derivatives market in Russia has revealed significant changes in its structure and dynamics. The introduction of sanctions led to the introduction of new financial instruments, sanctions stimulated innovation and development of domestic infrastructure. The role of financial market infrastructural organizations, state institutions and the Bank of Russia is increasing. There is a growing interest in local and regional hedging instruments, increasing importance of the domestic market and markets of friendly countries. The prospects for the development of the derivatives market in the Russian state look promising if a number of steps are realized. Possible development scenarios include: further strengthening of internal infrastructure, simplification of accounting procedures, development of new financial products adapted to current conditions.