Market-Oriented vs. Bank-Oriented Financial Systems: Post-Crisis Balance Shifts in Russia and Abroad

Рыночно-ориентированные и банко-ориентированные финансовые системы: посткризисные соотношения в России и в мире

Doroshenko, Marina E. (Дорошенко, Марина), Sergey Dubinin and Loleit, Anna S. (Лолейт, Анна) ()
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Doroshenko, Marina E. (Дорошенко, Марина): Lomonosov Moscow State University
Loleit, Anna S. (Лолейт, Анна): Boston Consulting Group

Ekonomicheskaya Politika / Economic Policy, 2019, vol. 5, 100-123

Abstract: The paper contributes to empirical discussion of pros and contras of bankoriented vs. market-oriented financial systems found in both theoretical and empirical literature. Following Beck’s and Levine’s methodological approach, we measure post-crisis shifts in financial structure ratios across the world; the research suggests that national financial systems in general tend to be biased toward stronger polarization. Some of them, however, shift toward market domination, while others (Russia being among them) turn to bank domination. International comparative studies prove that financial structure ratio is subject to variation over time, and both of its types may be sustainable in an enabling environment. Detailed empirical studies of Russia’s financial structure reveal both economic and policy origins of trend reverses from the bank orientation in the 1990s to the market orientation in 2001–2010 and back to the bank orientation after 2011. We argue that, for now, enhancing bank domination makes a poor contribution to general economic development due to the oligopolistic structure of the Russian banking sector and the resulting X-inefficiency. Nevertheless, the trend holds positive potential to mobilize liquidity from both households and firms, if properly supported by relevant policy measures. Deliberate structural policy with adequate allowance for complementarity of the two segments may efficiently upgrade the Russian financial system.

Keywords: bank-oriented; market-oriented; financial system; financial structure; bank assets; stock markets (search for similar items in EconPapers)
JEL-codes: E44 G01 G15 G21 (search for similar items in EconPapers)
Date: 2019
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