Analysis of the Russian financial market: the current state in the global competition context
Development of the financial market is one of the most important tasks of the country. Economic growth of the country is impossible without availability of financial resources to the entities of all economy industries, first of all at the expense of participation and debt financing and risks insurance. As a result of external financing sources availability decrease and reduction of prices for raw materials from the middle of 2014 the increasing number of organizations pays attention to internal financing sources. Therefore tasks of domestic investors stimulation and favorable conditions for their functioning creating come to the forefront at the present stage of the financial market development.
During the last decade development of the Russian financial market took place in the globalized world, the security market internationalization growth, increase of quantity and amounts of cross-border investment transactions, and also strengthening of the competition among international financial centers. If we look at the dynamics of the Russian financial market, then in the course of its development positive results have been achieved: in 2012-2015 the equity relation to GDP has increased from 9,4% to 11,1%, the credits to economy to GDP – from 41,6% to 54,4%, assets of pension funds to GDP – from 5,3% to 6,1%. However, compared to another developed and developing countries, the Russian financial market is rather low in the ranking.
For example, according to the global competitiveness index which is annually calculated by the World Economic Forum (WEF) following the results of 2015-2016 Russia has improved considerably "the financial market development" factor parameter which is a component of a final index compared to the ratings of previous years. However this parameter remains nevertheless at a very low level (3,5 points out of 6), at the same time Russia ranks 95th out of 140 and lags behind the other countries of BRICS and G20 considerably. The lowest parameters were marked in stability of banks, stock exchanges regulation, financing through the local stock market.
According to the financial development index developed by the International Monetary Fund (IMF) especially for the financial sector assessment, Russia exceeds steadily the parameters of developing countries and stands at the level of the countries of BRICS. At the same time a considerable benefit according to one parameter (for example, efficiency and availability of the financial markets) is followed by lagging on others (for example, to depth of the financial markets and institutes and level of institutes efficiency).
Representatives of the IMF mark that the weakness of the Russian financial market is the bank system prevalence which cannot provide the sufficient level of internal crediting, in case of an insignificant share of assets of non credit financial institutions. So, assets of banks have made 102,7% of GDP as for the end of 2015 while assets of other participants of the financial market (insurance companies, mutual fund, NPF) totaled up to 12,3% of GDP.
Also it should be marked that the Russian stock market which has been created in a greater degree as a result of the state enterprises privatization could not become the source of equity mass attraction because of low level of credibility to corporate management. Following the results of 2015 capitalization of the Russian stock market amounted to 28,8 trillion rub or 35,6% of GDP that was significantly lower than the average world level – 82,3% of GDP.
Another problem of the Russian financial market is its low performance. For example, such performance parameter of the bank system as the ratio of deposit and credit rates is comparable to the average level of developing countries, however rather high share of not interest incomes or the overheads relation to assets show that banks are forced to cover high expenses for the income account, not connected to their core business.
The specified problems can be explained by rather low activity of the population on the financial market, a great demand on bank deposits due to simplicity, habitualness and availability of this tool, preference of the population to address to credit institutions which provide services in the stock market in addition to standard banking services, and also mistrust to non credit financial institutions.
Besides, the Russian financial market is characterized by the high level of assets concentration: on average 10-15% of the companies of separate market segments have 80% of all assets. At the same time in recent years this tendency amplifies due to small players leaving from the market or their merging with other companies. For example, the number of credit institutions from 2012 to 2015 has decreased by 30% (from 956 to 733).
Thus, today the Russian financial market is less developed not only compared to the markets of developed countries, but also developing. It a greater extent it is caused by insufficiently developed regulatory framework and an unstable economic situation, and also mistrusts of the population to the financial organizations and low financial literacy level. Due to this fact the Government of the Russian Federation has approved "Strategy of the financial market development of the Russian Federation till 2020" where the focus from the gross expansion in financial services consumption by the population is shifted to growth of satisfaction with financial services that will promote the long-term growth of the financial industry.
A number of measures are taken for the Russian financial market development. For example, to increase the financial literacy of the population the Ministry of Education introduced the thematic module of "social science" into the obligatory school program since 2016. According to the forecasts of analysts, the expected decrease of the key interest rate from the current level of 10,5% to 9,5% by the end of the year will play a great role in increase of financial services availability to the population and business. At the same time some banks already begin to reduce rates on the credits: for example, in July, 2016 the Sberbank has lowered rates on mortgage products by 0,5% to 12,5% per annum (or 11,9% for a mortgage with state support). Besides, since 2016 the Bank of Russia lowered the risk coefficient on the credits for small and medium-sized business from 100% to 75% that increases their appeal to credit institutions.