Informal Loans in Russia: Why Not to Borrow from a Bank?
After the 2008 crisis, the Russian consumer loan market shows high growth rates, accompanied by the quality deteriorating even faster. At the same time, a great proportion of households are not attracted by the banks and borrow informally. In this paper, we aim to learn why households refuse to become bank clients, using the data from a 2009–2010 national survey of Russian households. Our results suggest that household's choice of the informal credit market is based not only on credit rationing, but also on a lack of financial literacy, credit discipline and trust in the banking sector as a whole.