Stress Test of Russian Banks: lack of capital is not treated by changes in prudential regulation
The article reviews the measures of the Bank of Russia, adopted in response to a problem situation, characterized by three "points of tension": a sign of a new credit overheating, a significant reduction in the capital adequacy of banks and the growing problem of affiliated banks. Using the methodology of stress testing we concluded that these measures are not effective in terms that they are not able to improve situation. We propose first of all to harmonize prudential regulation of Russian banks. The emphasis is placed on the the development of new markets of the financial services provided by banks. This will boost the profitability of the banking sector without additional credit and market risks, increase capitalization of the sector and eliminate demand for state capital support of banks.