Foreign Banks, Finance, Russia by Victor Gorshkov
Asia and the Global Economy, 2022
Cashless payment has rapidly developed in emerging markets following the digitization of finance.... more Cashless payment has rapidly developed in emerging markets following the digitization of finance. In this paper, by calculating the ratio of cashless payment in Russia, we find that it takes the shape of J-curve exponential growth, unlike in other developed and emerging economies. Although debit cards significantly dominate other types of cashless payment, the development of e-money is also significant. Internal and external factors both account for the J-curve exponential growth in cashless payment, and the external factors have a larger impact. We distinguish the peculiar features in the promotion of cashless payment that are peculiar to Russia and highlight the fact that Russia's national payment system was formed to address rising national security and geopolitical risks. Cashless payment is centralized and administered by the Bank of Russia, in order to digitize the financial sector and the government, with the goal of driving the digital economy.
Fundamental and Empirical Research in Management, Economics and Trade. Proceedings of the Russian scientific conference. Part 1. Politech-Press: Saint-Petersburg, 2021
The paper summarizes world trends in the elaboration of digital currencies of central banks and e... more The paper summarizes world trends in the elaboration of digital currencies of central banks and evaluates problems and development prospects of the introduction of digital ruble. It also demonstrates that Russia has been actively involved in the development of digital ruble platform, the success of which will depend on both internal and external factors.
開智国際 大学紀要, 2019
The uncertainty regarding Russia’s further economic development in conditions of a new wave of sa... more The uncertainty regarding Russia’s further economic development in conditions of a new wave of sanctions imposed by the West is forcing Russia’s government to further shift East (the proclaimed pivot to the East policy), particularly towards strengthening its foreign relations with China. International sanctions deprived Russian banks of cheap financing from international capital markets, compelling them to search for new sources of capital financing. In this regard, it is important reevaluate the present condition of both Asian banks operating in Russia and Russian banks expanding to Asian countries. This paper selectively investigates foreign entry of Asian banks from China, Japan, and South Korea into the Russian banking market, particularly focusing on the analysis of their business activities. The author demonstrates that despite relatively high positions of Asian banks in global rankings, the scope of their activities in Russia remains limited. The macro-analysis of FDI has shown that the share of Asian banks in total banking liabilities remains rather moderate and the majority of the liabilities are short-term. The analysis of financial statements of banks, particularly focused on credit and deposit portfolios, allowed to identify market segments in which Asian banks operate. In conjunction with the support of their domestic clients under the follow the customer approach, Asian banks also provide corporate loans to both Russian and foreign large companies; a small number of Asian banks provides loans to Russian SMEs and invest into federal bonds of Russia’s government. Retail banking is mostly comprised of automobile loans with Japanese banks having leading positions in this market segment. The paper also highlights the fact that current credit portfolio structures of Asian banks are highly concentrated, industry-biased, and short-term. Thus, Asian banks can hardly be regarded as providers of manufacturing FDI and new sources of financing that are crucial for Russia’s economic modernization. Consequently, it is unclear whether there will be new windows of opportunity under the proclaimed initiative of the pivot to the East in the short term.
비교경제연구(The Comparative Economic Review), 2020
The role of the state in Russia’s banking has conventionally been rather
significant and in fact ... more The role of the state in Russia’s banking has conventionally been rather
significant and in fact it has expanded in recent years following the policies of the Bank of Russia that further strengthened the positions of state-controlled banks. This paper selectively not comprehensibly presents a short macroeconomic analysis of Russia’s banking sector and focuses on the multifunctional role of the state in the banking sector. The research outcomes showcase that government represented by the Bank of Russia is a weak promoter of the banking competition and a
weak stimulating actor of Russia’s economy. On one hand, it remains a
hypertrophied owner of the banking sector causing its enhanced nationalization and monopolization as the result of its recently implemented policies. However, on the other hand, the Bank of Russia can be definitely regarded as an effective regulator strengthening macroprudential control and supervisory functions via its ‘clearance campaign’ for the purpose of eliminating ‘banking holes’. The enhanced supervisory and regulatory functions of the Bank of Russia can be regarded as a positive sign as they help create healthy environment within the banking sector and aim to establish sound market discipline. However, in the long-run the level of state-permeation into the banking sector should be reconsidered as it pose srisks for further market distortions and suppressing competition.
The Journal of Comparative Economic Studies, 2018
Advantage, Routledge, 2017, 422 p.
The Journal of Comparative Economic Studies, 2018
The phenomena of foreign direct investment (FDI) and multinational corporations (MNCs) have been ... more The phenomena of foreign direct investment (FDI) and multinational corporations (MNCs) have been in the centre of academic discussion for years. The first attempts by economists to analyse multinational corporations were the works of John Dunning, Raymond Vernon, and Stephen Hymer. The firm-specific advantages and ownership advantages developed since Hymer's seminal work and the ownership-location-internalization (OLI) paradigm proposed by Dunning are undoubtedly the most important contributions to international business theory, and they were extremely relevant in the time .
KIER Discussion Paper Series No. 1015, 2019
policies. In the present paper, we have demonstrated how policies of the Bank of Russia since 201... more policies. In the present paper, we have demonstrated how policies of the Bank of Russia since 2013 have enhanced the level of favorable conditions for stateof the Central Bank of Russia and summarized major disturbing trends, such as the increased amount of license revocations, the split within the Association of Russian banks, enhanced state support towards state-controlled banks, that are reshaping the institutional structure of of Russia can be viewed as a positive sign as they help create the healthy environment within the sector and aim to establish market discipline, however, current policies simultaneously cause significant market distortions and further suppress competition.
UNP RC Discussion Paper Series 18 E 0 4, 2018
This paper provides an overview of foreign entry of Asian banks from China, Japan, and South Kore... more This paper provides an overview of foreign entry of Asian banks from China, Japan, and South Korea into the Russian banking market, particularly focusing on the analysis of their business activities. The author demonstrates that despite relatively high positions of Asian banks in the global rankings, the scope of their activities in Russia remains rather limited. Historically, it is possible to define three stages of foreign entry of Asian banks, namely, 1990s, 2007-09, and 2011-14, however, the majority of banks has entered Russia in 2000s, following Russia’s high economic growth. Chinese banks entered as pioneers; nevertheless, Japan is currently leading in terms of number of domestic subsidiaries. The analysis of credit and deposit portfolios, allowed to identify the following market segments in which Asian banks operate: support to their domestic clients under the follow the customer approach, corporate loans to both Russian and large foreign companies, corporate loans to Russian SMEs, and investment into federal bonds of Russia’s government. The retail banking is mostly comprised of automobile loans with the Japanese banks having the leading positions in this market segment. The paper also highlights the fact that the quality of the current credit portfolio structure is highly concentrated, industry-biased, and short-term. Thus, Asian banks can hardly be regarded as the providers of the manufacturing FDI that are crucial for Russia’s economy.
(Discussion Paper, first draft)
Following recent government initiatives, such as the shift (turn) to the East and the possibility... more Following recent government initiatives, such as the shift (turn) to the East and the possibility of establishing new economic and investment cooperation with the Asia-Pacific region and other regions, proposed in conditions of financial and economic sanctions imposed towards Russia by the West, the study aims to evaluate whether any significant structural changes in the Russian outward banking foreign direct investment emerged in 2013-17 as the result of the proposed initiatives. By analyzing both the macro-picture of outward banking foreign direct investment and behavioral patterns of Russian banks since 1990s, the study found that only a marginal number of Russian banks, comprising of large state-owned banks, banks closely related to the natural resource-type Russian multinational corporations, and large private banks, have the capacity to expand their operations abroad. While the increasing presence of the natural resource-type Russian multinational corporations in the Asian and African regions is slowly luring Russian banks into these markets, drastic structural changes in the outward banking foreign direct investment are unachievable in the short-term. The geographical distribution of Russian banks remains unchanged with offshore financial centers, Europe, and the Commonwealth of Independent States being the traditional destinations of Russian outward banking foreign direct investment.
The Journal of Comparative Economic Studies, 2017
The purpose of this study is to shed light on the crucial role of financial education and financi... more The purpose of this study is to shed light on the crucial role of financial education and financial inclusion in overcoming the chronically low level of long-term investments in the Russian economy. By providing a short overview of recent developments on financial inclusion in Russia, we will demonstrate that despite relatively moderate progress in promoting financial inclusion, there remain significant challenges for the government. Territorial discrepancies in the distribution of financial products and services persist across Russia: Providers of such products and services are mostly concentrated in the western part of the country. The banking sector remains over-segmented with a small number of highly capitalised banks and a large amount of undercapitalised small and medium banks. In addition, the quality of financial products and services remains low together with a generally low level of trust towards the banking sector by the Russian population. Moreover, it seems that some individuals, households, and firms are prone to underestimate potential risks of capital borrowing. Thus, the general level of financial literacy in Russia is insufficient. In conditions of low access to loans for many small and medium firms, the greatest challenge facing the Russian government is how to promote the recognition of importance of long-term savings and investments that are a pre-requisite for further development and modernisation of the economy.
The Unwinding of the Globalist Dream: EU, Russia and China (Book)
In this paper, we chronologically define two periods of foreign entry by examining inward banking... more In this paper, we chronologically define two periods of foreign entry by examining inward banking FDI into Russia's banking sector on the example of banks with 100% foreign capital participation: the 1990s and 2000s. Using a sample of 78 foreign banks, we analyse their geographical distribution by home country, structure of ultimate owners and functional role in the market. Our result defines six cluster groups of foreign banks depending on entry motivations. Further, we explore the impact of Russia's institutional environment on the motives for engaging in banking FDI and provide evidence to support the hypothesis that offshore capital is present in the form of 'quasi-foreign' and 'pseudo-foreign' banks. We argue that 'pseudo-foreign' banks represent cases of round-tripping banking FDI that aim to escape the imperfections of the institutional environment in Russia.
The present paper targets activity of Russian banks expanding their businesses abroad. Within the... more The present paper targets activity of Russian banks expanding their businesses abroad. Within the framework of existing multinational theory we examine motivation, entry modes and strategies of Russian foreign banks. We demonstrated on the example of Russia that distinctive features of banking sectors of host and home countries, offshore business of Russian banks, hidden forms of expansion through third countries, role of banks in other outward foreign investments, non-transparency of legal actors of foreign banks and their strong interrelation with the state and recourse-based TNCs and large financial and industrial groups, cultural and historical background among the host and home countries, all these factors in fact do matter and should be considered when investigating the foreign expansion of banks. Some suggestions were made in order to extend existing theoretical base on multinational banking theory. JEL Classification Numbers: F23, F30, G20, G21, P29, P33 The amount of accumulated inward FDI in 2010 was 369.1 billion dollars (15% less than the preliminary calculations). So-called reinvestments (returning of the Russian capital in the form of FDI) are also calculated in CBR statistics. Affiliated businesses of Russian companies are registered in offshore businesses (Cyprus, British Virgin Islands, Bermuda) and are the main sources of these so-called pseudo-FDI (for further details refer to . Katolay (2005) distinguishes legal FDI (including investments in oil tankers), pseudo-FDI (mainly round-tripping FDI via Cyprus and other offshores, but also some other categories of investments), illegal FDI, other forms of "capital flight". 4) For the purpose of comparison some data from Rosstat and UNCTAD is also being used.
This paper examines the activities of Russian banks expanding their businesses abroad. By looking... more This paper examines the activities of Russian banks expanding their businesses abroad. By looking at their outward foreign direct investment, we apply the existing multinational banking theory in order to explain motivation, entry modes, and strategies of Russian banks. Through the Russian example, we demonstrate that idiosyncratic features of the banking sectors of the host and home countries and the institutional context in fact do matter and should be considered when analysing foreign expansion of banks. We also show that factors such as offshore business of Russian banks, hidden forms of expansion via third countries, role of banks in other outward foreign investments, non-transparency of legal actors of foreign banks and their strong interrelation with the state, resource-based TNCs and large financial and industrial groups, and cultural and historical background among the host and home countries are crucial in determining the microeconomic, macroeconomic, and institutional contexts that influence the foreign expansion of Russian banks. We provide some preliminary suggestions in order to extend the existing theoretical base on multinational banking theory.
The present paper analyses motivation, entry modes and strategies of foreign banks entering into ... more The present paper analyses motivation, entry modes and strategies of foreign banks entering into the Russian market. The share of foreign assets in the banking sector is gradually increasing, proving the fact that more and more foreign banks show their interest in the Russian banking sector. What lies behind this growth? The article shows that motivation for entry is similar to some other developing and transition economies (both PUSH and PULL reasons exist) and presents some peculiar features concerning the modes of entry and strategies. It is shown that recently organic strategy growth is gradually replaced by M&A.
The paper represents a case study of Japanese banks operating on the Russian banking market. We p... more The paper represents a case study of Japanese banks operating on the Russian banking market. We particularly analyze motivation, organizational representation, entry modes and strategies of Japanese banks. We argue that in case of Japanese banks both the specificity of the home country (Japan) (relationship banking, main bank system) and host country (Russia) indeed plays an important role in expanding their businesses abroad. The shares of Japanese banks in total banking assets, deposits and lending rate of the Russian banking sector remain low, and in general Japanese banks in Russia might be regarded as "followers" of the Japanese business in Russia. Meanwhile, we also provide evidence that PULL factors are the driving forces providing reasoning for the exceptions from this rule in the behavioral patterns of Japanese banks. The paper summarizes history of foreign expansion of Japanese banks into the Russian market and aims to conduct analysis under the framework of the multinational banking theory.
Japan, Trade Remedy, Trade Policy by Victor Gorshkov
Regionalistics, 2021
In this paper, we have addressed the specificity of Japan’s cashless payments in comparison to o... more In this paper, we have addressed the specificity of Japan’s cashless payments in comparison to other economies, particularly countries from North-East Asia, and have considered the impact of COVID-19 pandemic. The specificity of Japan’s cashless payments can be explained by both external and internal reasons. Our major finding is that COVID-19 pandemic has slightly trigged further development of cashless payments in Japan, however, numerous domestic factors still impede this process. Digitalization of the Japanese economy might positively affect further promotion of cashless payments.
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Foreign Banks, Finance, Russia by Victor Gorshkov
significant and in fact it has expanded in recent years following the policies of the Bank of Russia that further strengthened the positions of state-controlled banks. This paper selectively not comprehensibly presents a short macroeconomic analysis of Russia’s banking sector and focuses on the multifunctional role of the state in the banking sector. The research outcomes showcase that government represented by the Bank of Russia is a weak promoter of the banking competition and a
weak stimulating actor of Russia’s economy. On one hand, it remains a
hypertrophied owner of the banking sector causing its enhanced nationalization and monopolization as the result of its recently implemented policies. However, on the other hand, the Bank of Russia can be definitely regarded as an effective regulator strengthening macroprudential control and supervisory functions via its ‘clearance campaign’ for the purpose of eliminating ‘banking holes’. The enhanced supervisory and regulatory functions of the Bank of Russia can be regarded as a positive sign as they help create healthy environment within the banking sector and aim to establish sound market discipline. However, in the long-run the level of state-permeation into the banking sector should be reconsidered as it pose srisks for further market distortions and suppressing competition.
(Discussion Paper, first draft)
Japan, Trade Remedy, Trade Policy by Victor Gorshkov
significant and in fact it has expanded in recent years following the policies of the Bank of Russia that further strengthened the positions of state-controlled banks. This paper selectively not comprehensibly presents a short macroeconomic analysis of Russia’s banking sector and focuses on the multifunctional role of the state in the banking sector. The research outcomes showcase that government represented by the Bank of Russia is a weak promoter of the banking competition and a
weak stimulating actor of Russia’s economy. On one hand, it remains a
hypertrophied owner of the banking sector causing its enhanced nationalization and monopolization as the result of its recently implemented policies. However, on the other hand, the Bank of Russia can be definitely regarded as an effective regulator strengthening macroprudential control and supervisory functions via its ‘clearance campaign’ for the purpose of eliminating ‘banking holes’. The enhanced supervisory and regulatory functions of the Bank of Russia can be regarded as a positive sign as they help create healthy environment within the banking sector and aim to establish sound market discipline. However, in the long-run the level of state-permeation into the banking sector should be reconsidered as it pose srisks for further market distortions and suppressing competition.
(Discussion Paper, first draft)