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Evolution of the banking system in the Russian context: An institutional view
We undertook an institutional anbalysis of commercial banks in Russia. After the failed experiment with private financial intermediation in the 1990s, Russia migrated towards a banking system consisting of three -- rather than two -- tiers and featuring core institutions controlled by the state directly or indirectly. This evolution is consistent with this country's historical pattern of financial intermediation. It is also in line with recent trends in the real sector of the economy, where public ownership has rebound over the past decade. The core state-controlled banks have evolved into hybrid institutions, performing two various sets of functions: those of a regular commercial bank and a policy bank. We found a similar evolution in China, but not in the transition economies of central Europe. Institutional matrices theory suggests that, in non-market economies, centralized finance and credit allocation is the dominant institutional form, while private banking activity is complementary.