The estimation of the competitiveness of SME financing programs of development banks in Russia

Anna Bakaykina ()
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Anna Bakaykina: Russia Sustainable Financing Facility; Moscow, Russian Federation

Applied Econometrics, 2015, vol. 40, issue 4, 106-128

Abstract: This article performs the quantitative estimation of the competitiveness of small- and medium-sized enterprises’ (SME) financing programs of development banks (DB) in Russia in 2010 –2013. For these purposes, author propose an original approach based on optimization of the Lerner index (it is a share of marginal costs in interest rate) by the Lagrange multipliers for group of partner banks of each DB. The study shows that the partner banks of SME Bank and the European Bank for Reconstruction and Development (EBRD) have the highest margin. However, for some of these banks high margin is explained by low level of marginal costs, i.e. high efficiency, whereas for other banks it is associated with high interest rate on issued loans and hence low efficiency. In particular, the results of optimization show that EBRD has the most competitive SME lending program. An approach used by SME Bank leads to quite high level of marginal costs in interest rates of its partner banks in case of the reallocation of funds among the most solvent partner banks.

Keywords: banking competition; competitiveness; SME financing; development banks; optimization; method of Lagrange multipliers; Lerner index; BSTDB; EBRD; FMO; IFC; SME Bank (search for similar items in EconPapers)
JEL-codes: C52 C61 G11 G15 G21 G23 L14 L20 (search for similar items in EconPapers)
Date: 2015
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