This paper provides a comprehensive assessment of banking competition on the market for loans in the Russian banking system connecting it to various phases of the business cycle in Russia. Our focus is on price competition, which is measured through the Lerner index of market power. Using Lerner index, we investigate, first, the levels of interest rate mark-ups in the market for loans; second, the influence of these mark-ups on credit activity of banks as well as their relation with the size of banks. Next, we compare our measured Lerner index with three additional competition indicators, i.e. H-statistics of Panzar and Rosse (mix of price and quantity competition), Boone indicator (quantity and quality competition) and Herfindahl–Hirschman Index (quantity competition). For our comparisons, we choose the time period of 2005 Q1 to 2012 Q4, i.e. starting from one boom on the market for loans and ending with another boom so that between them there is one episode of macroeconomic and systemic banking crisis that could substantially change the strength of competition. Our estimations show that the impact of competition on credit activity of banks is non-linear – when price competition is too strict or too weak the credit activity of banks becomes slower. Next, before the crisis of 2008–2009 increases of both price and quantity competition took place; however, during the crisis these competition improvements were offset by uneven access of banks to refinancing resources and the deterioration of borrowers’ creditworthiness that entailed the rise of risk premium in interest rates on loans. After the crisis, price competition turned back to upward trend again stimulated by the growing boom on the market for retail loans, whereas quantity competition remains rather constrained.
Tenders for infrastructure concessions are on the agenda in Russia. The theory of the competitive biddings for concessions originates from the idea of competition for the field, further developed by H. Demsetz into the franchise bidding theory. But so far, tenders for concessions which took place in different infrastructure sectors have questioned whether the number of bidders was high enough to expect the results (tenders outcomes) predicted by Demsetz. In the article this question is answered basing on the theory of auctions with independent private values and with the price as a single selection criterion under different business strategies of the bidders. Some recommendations are proposed. The necessity as well as some limitations of usage of such tenders' results for natural monopolists' tariff regulation are shown.
The paper describes composition of stock ownership in Russian companies with particular attention to its concentration and effects on corporate control. Special attention is paid to business integration as important background for ownership consolidation. The paper analyzes intra-corporate relations among main actors of corporate governance and functioning of its internal tools with special focus on Board of Directors' composition and role. The correlation between the degree of concentration and companies' performance and modernization activities is also discussed. The research is based on large-scale survey of 822 joint-stock companies in industry and communications conducted in 2005 in 64 regions of the Russian Federation. The survey was organized within the joint Japanese-Russian project that is being implemented by scholars from the State University - Higher School of Economics and Hitotsubashi University.
Several approaches exist that help explain the motivations for corporate charity and philantropy. Structural functionalism associates these to the idea of solidarity, institutional approach they provide legitimacy for businesses, critical theory implies that they play an ideological role in sustaining the leading role of the dominating social class. This paper complements the existing models by treating these phenomena as a patrimonial type of exchange between business and government: the state provides the companies the opportunity to do business on its territory in exchange for their loyalty.
The paper analyses Russian corruption as a specific “industry” of the Russian economy that is in many important respects influenced by the political system. The latter, in turn, is also being transformed due to corruption. The authors introduce and discuss the basic concepts used in the corruption analysis: everyday corruption, business corruption, corruption markets, strategies of bribetakers etc. The authors propose a comprehensive cultural classification of the types of corruption taking into account its everyday and business aspects, property rights enforcement, vertical and horizontal relations within the power and between power, citizens, and businessmen. In view of the proposed typology corruption dynamics is analyzed, as well as the dynamics of its socioeconomic and political conditions in Russia beginning from the prerevolutionary times and up to the present day. Basing upon the data taken from the mass surveys characteristics of the markets for everyday and business corruption are estimated in dynamics and the causes for the changes in their structure are indicated.
We present comparative analysis of the impact of centralized and decentralized corruption for private sector. Theory and empirical evidence point out to a «double jeopardy» of decentralized corruption which increases the burden of corruption upon private sector firms and weakens the incentives of bureaucracy to provide public production inputs, such as infrastructure. These outcomes are produced by simultaneous free-riding and the tragedy of the commons effects. The empirical part of the paper utilizes data of the Business Environment and Enterprise Performance project.
The paper analyzes the trend in the development of the creative economy in Russia and estimates the export potential of the Russian creative industries. The author demonstrates that modern concepts of cultural heritage preservation focus on increasing the efficiency of its use and that building creative potential and systematic support of the creative industries is becoming a key task of the strategic development of regions and municipalities in the post-industrial era.
In the article a simple model of stochastic credit bubble is proposed that has been growing over the recent years as a result of the global excess liquidity. That has given rise to formation of a random sequence of debt buyers clusters due to widespread practice of loan repayments with new debt issuance. Greatly increased positive feedbacks in the global market speed up the debt growth via structured financial instruments, and the debt bubble bursts at the critical value of global liquidity. The percolation process demonstrates how asset securitization and financial innovations might direct global system towards collapse. The model makes it possible to estimate the power law probability and time to a global collapse.
This paper presents the first in the Russian literature review of research, devoted to the roles of private and public investment in security in the economics of crime. We describe theoretical and empirical papers that deal with the strength of the deterrence and diversion effects, as well as the interaction between different security measures. Special attention is given to the roles that income inequality and institutional set-up play in the formation of the profile of security measures and the resulting distribution of crime. We also present empirical results based on the Russian regional data, which reveal a significant relationship between inequality and the ratio of private to public security measures, as well as substantial differences between more- and less democratic regions.