Structual or institutional change?

The paper attempts measuring institutional change as compared to structural change. I take the case of the Russian banking industry in 1991–2016. I put forward a set of metrics featuring the actors broken down by ownership form (stateowned vs. private banks) and the resources that each bank category commands. Another set of metrics features the regime and modality of banking according to certain norms. These latter are quantified via the performance of key banking functions with regard to the rest of the economy, the relevance of banking for the economy and its contribution to social welfare. At the first stage, the communist-era credit system falls apart, and so do coordination mechanisms between monetary and real sectors of the economy. After the 1998 crisis, evolution goes in the direction of greater government involvement in banks and centralized allocation of financial resources. Banks become more committed to their core business of financing the real economy. The performance of state-owned banks improves whereas that of privately owned banks deteriorates. Structural change has not yet led to a substantially different way of functioning of the banking industry, according to pattern recognition methodology. A state-owned bank acts mainly under the guidance of its management rather than the government, and pursues profitability. The contribution of this paper is that it tackles the interplay between structural and institutional change and tries to quantify both of them in a particular economic sector.

1. Ananyich B.V. (2006). Banking houses in Russia in 1860–1914. Essays on the history of private entrepreneurship. Moscow, ROSSPAN (in Russian).

2. Andryushin S.A. (1998). Russian banking system: Evolution and development concept. Moscow, Institute of Economics RAS (in Russian).

3. Baranov A., Malkov E., Polishchuk L., Rochlitz M., Syunyaev G. (2015). How (not) to measure Russian regional institutions. Voprosi Ekonomiki, no. 2, pp. 69–103 (in Russian).

4. Berkowitz D., Hoekstra M. Schoors K. (2014), Bank privatization, finance, and growth. Journal of Development Economics, vol. 110, p. 93–106.

5. Bertay A., Demirgüç-Kunt A., Huizinga H. (2015), Bank ownership and credit over the business cycle: Is lending by state banks less procyclical? Journal of Banking and Finance, vol. 50, p. 326–339.

6. Bezemer D. (2014). Schumpeter might be right again: The functional differentiation of credit. Journal of Evolutionary Economics, vol. 24, no. 5, pp. 935–950.

7. Bonin J., Hasan I., Wachtel P. (2005). Bank performance, efficiency and ownership in transition countries. Journal of Banking and Finance, vol. 29, no. 1, pp. 31–53.

8. Bovykin V.I., Petrov Yu A. (1994). Commercial banks of the Russian Empire. Moscow, Perspektiva (in Russian).

9. Buchanan J., Chai D.H., Deakin S. (2014). Empirical analysis of legal institutions and institutional change: Multiple-methods approaches and their application to corporate governance research. Journal of Institutional Economics, vol. 10, no. 1, pp. 1–20.

10. Bugrov A.V. (2003). Essays on the history of Government Banks in Russia. Moscow, KVAN (in Russian).

11. Carvalho D. (2014). The real effects of governmentowned banks: Evidence from an emerging market. Journal of Finance, vol. 69, no. 2, pp. 577–609.

12. CBR (2017). Banking supervision report, 2016. Moscow, Central Bank of Russia (in Russian).

13. Chernykh L., Theodossiou A. (2011). Determinants of bank long-term lending behavior: Evidence from Russia. Multinational Finance Journal, vol. 15, no. 3/4, pp. 193–216.

14. Coleman N., Feler L. (2015). Bank ownership, lending, and local economic performance during the 2008–2009 financial crisis. Journal of Monetary Economics, vol. 71, no. 4, pp. 50–66.

15. Dinç S. (2005). Politicians and banks: Political influences on government-owned banks in emerging countries. Journal of Financial Economics, vol. 77, no. 2, pp. 453–479.

16. Dopfer K. (2012). The origins of mesoeconomics. Journal of Evolutionary Economics, vol. 22, no. 1, pp. 133–160. doi:10.1007/s00191-011-0218-4.

17. Freinkman L., Dashkeev V., Muftiahetdinova M. (2009). Analysis of institutional dynamics in the economies in transition. IET Working Papers, no. 126. Moscow, Gaydar Institute (in Russian).

18. Fungáčová Z., Herrala R., Weill L. (2013). The influence of bank ownership on credit supply: Evidence from the recent financial crisis. Emerging Markets Review, vol. 15, no. 2, pp. 136–147.

19. Gindin I.F. (1948). Russian Commercial Banks: From the history of financial capital in Russia. Moscow, GosFinIzdat (in Russian).

20. Hardie I., Howarth D. (2013). Market-based banking and the international financial crisis. Oxford, Oxford University Press.

21. Ibragimova D.Kh. (2015). Evolution of trust to financial institutions and the paradox and household saving behaviour. Bankovskoye Delo, no. 12, pp. 27–34 (in Russian).

22. Karas A., Schoors K., Weill L. (2010). Are private banks more efficient than public banks? Evidence from Russia. Economics of Transition. 2010, vol. 18, no. 1, pp. 209–244.

23. Kirdina S., Rubinstein A., Tolmacheva I. (2010). Some quantitative assessment of institutional change: The case of the Russian legislation study. Terra Economicus, vol. 8, no. 3, pp. 8–22 (in Russian).

24. Kirdina S.G. (2014). Institutional Matrices and the development of Russia: An introduction to X-Y–Theory. St.-Pet.; Moscow, Nestor-Istoria (in Russian).

25. Kleiner G.B. (2002). The efficiency of transitional mesoeconomic systems. Problemy Teorii i Praktiki Upravleniya, no. 6, pp. 24–30 (in Russian).

26. Kleiner G., Petryan D., Bechenov A. (2004). The role of the state and public sector in the economy: Revisited. Voprosi Ekonomiki, no. 4, pp. 25–41 (in Russian).

27. Krylova L.V. (2011). The functions of banks and banking system: Theoretical aspect and quantification methods. Finansovaya Analitika: Problemy i Resheniya, no. 7(49), pp. 2–8 (in Russian).

28. Krylova L.V., Krylov S.V. (2014). Institutional structure of the Russian banking system and the direction of its transformation. Finansovaya Analitika: Problemy i Resheniya, no. 40, pp. 2–10 (in Russian).

29. La Porta R., López-de-Silanes F., Shleifer A. (2002). Government ownership of banks. Journal of Finance, vol. 57, no. 1, pp. 265–301.

30. Mayevsky V.I. (1997). An introduction to evolutionary macroeconomics. Moscow, Yaponia Segodnya (in Russian).

31. North D. (1997). Institutions, institutional change and economic performance. Moscow, Nachala-Press (in Russian).

32. Polterovich V.M. (2006). Institutional reform strategies: Promising trajectories. Economics and Math. Methods, vol. 42, no. 1, pp. 3–18 (in Russian).

33. Rubinstein A.Ya. (2009). The theory of patronized goods. Article 1. Patronized goods and their place in economic theory. Obschestvenniye Nauki i Sovremennost, no. 1, pp. 139–152 (in Russian).

34. Salomatina S.A. (2004). Commercial Banks in Russia: The dynamics and structure of operations, 1864– 1917. Moscow, ROSSPAN (in Russian).

35. Sapienza P. (2004). The effects of government ownership on bank lending. Journal of Financial Economics, vol. 72, no. 2, pp. 357–384.

36. Schumpeter J.A. (1982). The theory of economic development. Moscow, Progress (in Russian).

37. Tulin D.V. (2006). How banks falsify their financial reports. Dengi i Kredit, no. 3, pp. 15–20 (in Russian)

38. Urazova S.A. (2015а). Wave of reforms and counter Russian banking system in the dynamics of longterm economic cycle ND Kondratiev. Finansoviye Issledovaniya, no. 3 (48), pp. 79–90 (in Russian).

39. Urazova S.A. (2015b). Wave of reforms and counter Russian banking system in the dynamics of long-term economic cycle ND Kondratiev (continued). Finansoviye Issledovaniya, no. 4 (49), pp. 103–112 (in Russian).

40. Vanteeva N., Hickson C. (2015). Gerschenkron revisited: The new corporate Russia. Journal of Economic Issues, vol. 49, no. 4, pp. 978–1007.

41. Vernikov A.V. (2009). Assessing government participation in the Russian banking system. Dengi i Kredit, no. 11, pp. 4–14 (in Russian).

42. Vernikov A.V., Kirdina S.G. (2010). Evolution of banks in Х-economies and Y-economies. Evolutionary economics and finance: Innovation, competition, and economic growth. Moscow, Institute of Economics RAS, pp. 244–278 (in Russian).

43. Vernikov A.V., Mamonov M.E. (2015). Comparative efficiency analysis of state-controlled and private banks in Russia: New empirical evidence. Dengi i Kredit, no. 7, pp. 21–32 (in Russian).

44. Vernikov A. (2015). A guide to Russian bank data: Breaking down the sample of banks. SSRN Working Paper Series, no. 2600738. URL: http://ssrn.com/ abstract=2600738.

45. Vernikov A.V., Mamonov M.E. (2016). Long-term bank lending in Russia: Which banks lend more and why? EKO, no. 9, pp. 135–150 (in Russian).

46. Voigt S. (2013). How (not) to measure institutions. Journal of Institutional Economics, vol. 9, no. 1, pp. 1–26.

47. Woo-Cumings M. (ed.) (1999). The developmental state. Ithaca; London, Cornell University Press.