ALEXEY VEDEV: EVER-GREATER MONOPOLIZATION OF FINANCIAL SECTOR BY THE STATE PREVENTS ITS DEVELOPMENT
RBC published at its column “Opinion” the article “State power: when institutional investors will be back at the market” by Alexey Vedev, Head of Financial Studies Department of the Gaidar Institute, expert of Accounts Chamber”.
“Dependence of Russian financial market on the state is generally recognized being high and this negatively affects the development dynamics of both banking and non-banking sectors. The share of state-controlled banks in total assets of banking sector is approaching 60%; a similar indicator in total assets of private pension funds exceeds 80%. The state’s share in the investment and insurance markets is not so great, however, their regulatory burden is so voluminous that it not only blocks emergence of new players, but also inhibits growth and development of existing ones”, the expert wrote.
“At the same time, denationalization of financial sector seems unlikely in a near future due to a number of reasons.” According to Aleksey Vedev, “denationalization as such should not become an end in itself: instantaneous forced change of ownership will not lead to anything as such”.
“High share of the state in the capital of financial organizations is a consequence of undeveloped institutional environment and low quality of management of state banks. This is typical for vast majority of emerging economies. It is a rather lengthy process to overcome these constraints”, Alexey Vedev concluded.
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“At the same time, denationalization of financial sector seems unlikely in a near future due to a number of reasons.” According to Aleksey Vedev, “denationalization as such should not become an end in itself: instantaneous forced change of ownership will not lead to anything as such”.
“High share of the state in the capital of financial organizations is a consequence of undeveloped institutional environment and low quality of management of state banks. This is typical for vast majority of emerging economies. It is a rather lengthy process to overcome these constraints”, Alexey Vedev concluded.
Please, find here full text of the article