Lending to Russian Small Businesses: From a Traditional to a Partnership-based Banking Model

Natalia Egorova and Ekaterina Koroleva
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Natalia Egorova: Central Economics and Mathematics Institute, Moscow, Russia
Ekaterina Koroleva: Central Economics and Mathematics Institute, Moscow, Russia

HSE Economic Journal, 2020, vol. 24, issue 2, 191–214

Abstract: The article is devoted to the problem of insufficient credit and investment support for small and medium enterprises (SME) and their ineffective interaction with banks. In the sphere of relations between the banking and business sectors, which is the subject of research, two models of cooperation between small firms and banking organizations have been identified: the existing (traditional, “consumer-based”) and modified (“partnership-based”), based on a higher level of mutual trust, which allows reconciling contradictory interests of these agents. The purpose of this paper is to identify methods of transforming the existing model of interaction between SMEs and banks into a “partnership-based” and to justify the need of measuring trust level as an important stage of this study. A comparative analysis of the existing methods of quantitative assessment of trust level between various economic entities has been carried out, their shortcomings have been identified and the conclusion about the lack of adequate approach to the assessment of trust level between small firms and banks has been made. Thereby an integral index that synthesizes economic-statistical and expert approaches and combines economic indicators and the results of surveys (representatives of banking and business sectors) has been proposed. This index has been verified and compared with similar mesoscale indicators that measure trust level. In order to increase the level of mutual trust between market agents a system of adaptive credit and investment consulting (AKIK) has been proposed. The use of AKIK, in comparison with other programs (“Svoe Delo”, “Delovaya Sreda”), is aimed to set stable relations and to consider long-term economic interests of small enterprises and banks. The method, based on the modification of a foreign methodology that manages to measure the influence of trust level on economic growth (P. Zack, F. Kiefer, S. Knack), has been developed. This method helps to calculate economic effects obtained due to this factor for small business and the entire economy.

Keywords: models of interaction; small and medium enterprises; banks; trust; measurement of trust level; trust indices; adaptive consulting (search for similar items in EconPapers)
JEL-codes: G21 L26 (search for similar items in EconPapers)
Date: 2020
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