BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
Andrei V. Vernikov
Russia's banking sector transition: Where to?
Abstract: This paper applies an analytical paradigm of institutional
economics to the transition of the Russian banking sector, focusing on the
interplay between ownership change and institutional change. We find that
the state’s withdrawal from commercial banking has been inconsistent and
limited in scope. To this day, core banks have yet to be privatized and the
state has made a comeback as owner of the dominant market participants. We
also look at the new institutions imported into Russia to regulate banking
and finance, including rule of law, competition, deposit insurance,
bankruptcy, and corporate governance. The unfortunate combination of this
new institutional overlay and traditional local norms of behavior have
brought Russia to an impasse – the banking sector’s ownership structure
hinders further advancement of market institutions. Indeed, we may now be
witnessing is a retreat from the original market.
Keywords: banking sector reform; privatization; Russia; economic transition; institutional economics; (follow links to similar papers)
JEL-Codes: G21; G28; P34; P37; (follow links to similar papers)
34 pages, March 7, 2007
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