Interbank Competition in the Russian banking Market

The stable development of the banking sector is closely related to interbank competition. The subject of the research is the improvement of interbank competition, which contributes to improving service quality standards, reducing costs and prices, expanding the product line, and clearing up the market from weak and unscrupulous participants. The study aims to make recommendations for improving interbank competition to ensure the stability of the country’s banking sector. The work employed the analytical methods of analysis, synthesis, comparison, graphic method. The theoretical aspects of the subject helped the authors to formulate their concept of interbank competition as the bank competition attractive sources of accumulating resources and placing them considering the customer-oriented approach and in order to ensure their stability in the banking market. The practical analysis relies on statistical data from the Bank of Russia and reflects the uneven distribution of banks across the country with the dominance of banks with state participation. The systematic and integrated approaches of the study made it possible to identify the main trends in interbank competition: monopolization, centralization, concentration of capital, federalization, and globalization. The authors conclude that a significant decrease in the number of banks against the increase in assets of state-owned banks limits interbank competition. The largest state-owned banks dominate in the country’s deposit and credit markets. The Herfindahl-Hirschman index demonstrates the sufficient importance of credit institutions in the market. Foreign banks also influence their competitiveness. The authors proposed measures aimed at strengthening interbank competition: reducing the degree of state participation in the banks’ capital by establishing a standard for the permissible state participation in the authorized capital of credit institutions; establishing equal “rules of the game” for all participants in the banking market and excluding state privileges; developing regional small and medium-sized banks through tax and financial incentives. The prospect of further research is in a more detailed study of minimizing factors that negatively affect interbank competition.

1. Porter M. E. Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press; 1998. 397 p. (Russ. ed.: Porter M. Konkurentnaya strategiya: Metodika analiza otrasley i konkurentov. Moscow: Alpina Publisher; 2012. 454 p.).

2. Robinson J. The economics of imperfect competition. New York: St. Martin’s Press; 1969. 352 p. (Russ. ed.: Robinson J. Ekonomicheskaya teoriya nesovershennoi konkurentsii. Moscow: Progress; 1986. 472 p.).

3. Hayek F. A. Prices and production and other works. Auburn, AL: Ludwig von Mises Institute, 1931. 564 p. (Russ. ed.: Hayek F. A. Tseny i proizvodstvo. Chelyabinsk: Sotsium; 2008. 199 p.).

4. Chamberlin E. Н. Theory of monopolistic competition. Cambridge: Harvard University Press; 1933. 213 p. (Russ. ed.: Chamberlin E. Н. Teoriya monopolisticheskoi konkurentsii. Moscow: Ekonomika; 1996. 350 p.).

5. Edgeworth F. Y. Mathematical psychics: An essay on the application of mathematics to the moral sciences. London: C. Kegan Paul and Co.; 1881. 150 p.

6. Ovchinnikova O., Dynnikov E. A., Ovchinnikova N. E. Improving the mechanism for regulating the stability of the banking system. Finansy i kredit = Finance and Credit. 2011;(17):8-15. (In Russ.).

7. Demchenko L. V. Competition as a macroeconomic factor of stability of the banking system. Vestnik Orenburgskogo gosudarstvennogo universiteta = Orenburg State University Vestnik. 2006;(2-1):145-150. (In Russ.).

8. Sadkov V. G., Podmaster’eva A. K. Competition in financial markets: State, problems, methods of regulation. Finansy i kredit = Finance and Credit. 2008;(6):2-11. (In Russ.).

9. Skorlupina Yu. O. Methods to assess the inter-bank competition in the Russian banking market. Finansovaya analitika: problemy i resheniya = Financial Analytics: Science and Experience. 2015;(5):53-62. (In Russ.).

10. Kutyin V. M. Building a map of strategic competition in the banking sector. Marketing uslug. 2011;(3):194-216. (In Russ.).

11. Donetskova O. Yu., Sadykova L. M. Modern features of the competitive environment in banking business. Azimut nauchnykh issledovaniy: ekonomika i upravleniye = ASR: Economics and Management (Azimuth of Scientific Research). 2018;7(3):83-86. (In Russ.).

12. Khandruev A. A., Chumachenko A. A. Competitive environment and modernization of the structure of the Russian banking sector. Bankovskoe delo = Banking. 2010;(11):6-13. (In Russ.).

13. Bondareva Yu., Shovikov S., Khairov R. Competition in the banking services market. Bankovskoe delo = Banking. 2004;(1):9-14. (In Russ.).

14. Shelkunova T. G., Gagloeva K. A. Banking competition and competitiveness: Essence, concept, specificity. In: Problems and prospects of economics and management. Proc. 3rd Int. sci. conf. (St. Petersburg, Dec. 2014). St. Petersburg: Zanevskaya ploshchad’; 2014:141-145. (In Russ.).

15. Osipovskaya A. V. Features of competition in the Russian market of banking services. Molodoi uchenyi = Young Scientist. 2018;(51):259-262. (In Russ.).

16. Buchkova A. A. Competition in the banking sector. Nauka-Rastudent. ru. 2016;(3):4. (In Russ.).

17. Shaposhnikov A. M. Interbank competition and assessment of the competitiveness of commercial banks. Cheboksary: Sreda; 2020. 128 p. (In Russ.).

18. Widerker N. V., Tsoneva E. Yu. Interbank competition as a factor in improving the quality of banking services. Mezhdunarodnyi zhurnal gumanitarnykh i estestvennykh nauk = International Journal of Humanities and Natural Sciences. 2017;(3-2):104-107. (In Russ.).

19. Aliev I. A. Competitive environment in the Russian banking system. ETAP: ekonomicheskaya teoriya, analiz, praktika = ETAP: Economic Theory, Analysis, and Practice. 2017;(5):92-100. (In Russ.).

20. Malakhov I. O., Timerkhanov R. Sh. Problems of competitiveness of regional banks. Vesti nauchnykh dostizhenii. Ekonomika i pravo. 2020;(3):116-119. (In Russ.).