The Impact of State-Controlled Banks on the Russian Banking Sector

A senior Russian economist examines the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country's banking system in early 2011. The author offers a credible estimate of the size of the country's state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, he explains the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author's interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country's banking sector.     

Bank Depositor Behavior in Russia in the Aftermath of Financial Crisis

An international team of economists examines the factors influencing the behavior of Russian depositors in the immediate aftermath of that country's 1998 financial crisis, drawing upon two largely unutilized data sources—data from the Russian state savings bank Sberbank and a November 1998 household survey. After first reviewing the evolution of the household deposit market during the 1990s, they explore regional variations in net withdrawals from Sberbank branches during the period August-October 1998 as well as identify characteristics of individual/household depositors making (or attempting to make) such withdrawals. More severe runs on Sberbank outlets are found to be associated with more affluent and entrepreneurial regions, regions of more youthful and less educated population closer to Moscow, and areas with greater media freedom. Subsequent public opinion survey analysis of the socioeconomic correlates of runs on all Russian banks during the 1998 crisis reveals some interesting differences (in the effects of education in particular) on the propensity to successfully withdraw deposits.     

Development of Local Financial Systems in Mainland China

Two Beijing-based economic geographers present a comprehensive study of local financial systems in China. The paper analyzes the most recently available (2006) regional data on exogenous (state-owned, foreign-owned, and joint shareholder-owned) and endogenous (city commercial banks and rural credit cooperatives) banks, highlighting the differences between the country's coastal and the lagging rural provinces located in China's central and western macroregions. A key component of the analysis is the geographic distribution of bank branches and assets. Special attention is devoted to Shanghai, the country's traditional financial center, which has attracted the bulk of foreign-owned banks and financial service providers seeking entry into the vast Chinese market. Journal of Economic Literature, Classification Numbers: G21, G28, O18, P34. 9 figures, 3 tables, 54 references.     

Ukraine's Geopolitical Choice, 2009

A noted specialist in international affairs and former U.S. ambassador to Ukraine reviews and analyzes the history of independent Ukraine's relations with Russia and the West following the disintegration of the Soviet Union. The author proceeds to examine the multifaceted Western position toward Kyiv as it has evolved through June 2009, paying due attention to the European Union and NATO. He then discusses the factors contributing to the volatility of Ukrainian-Russian relations following the Orange Revolution of 2004, including a range of specific concerns as well as more general Russian desires for a compliant government that would pay deference to key Russian interests. Concluding sections focus on Ukraine's future geopolitical trajectory in the run-up to the country's presidential elections in early 2010 and on internal problems (constitutional, market, and energy reform) that will command urgent attention once the political situation stabilizes and the outlines of a constructive engagement that could be pursued by the West are at hand. Journal of Economic Literature, Classification Numbers: F500, F520, P200. 1 figure, 1 table, 39 references.     

The Impact of Global Financial Crisis on the Mechanism of Economic Growth in Russia

A noted specialist on the Russian economy presents an assessment of the impact of the global financial crisis on the mechanism of the country's economic growth. Focusing on the demand side of the economic ledger, the author explores the question of whether Russia will be able to re-attain the high economic growth rates of the period from 2000 to 2007 after recovering from the crisis. The paper analyzes the sharp drop in production in 2008 and the first quarter of 2009, attributing most of the damage to liquidity problems and declines in the price of oil. Empirical evidence is based primarily on data collected by the author from the Central Bank of Russia and the country's federal bureau of statistics (Rosstat). Journal of Economic Literature, Classification Numbers: E010, E200, E660, F210, G010. 11 figures, 3 tables, 29 references.     

Blurring the Borders. How the Central Banks of the European Neutrals During the First World War Became Part of the State Machinery: Examining the Case of Norway

Abstract

This article analyses the relationship between the central banks and governments in the neutral countries during the First World War, with focus on the Norwegian development. It examines how independence was challenged, and the framework is a concept of central bank independence, which regards non-lending to the state as vital to the functioning of the central banks. This is a novel approach to the development during the war as the perspective has barely been discussed in the literature in Norway, and also seems to be disregarded in the standard international literature on central bank development. From this perspective the article argues that the Norwegian central bank’s pre-war independence was substantial compared to other central banks. Moreover, the distinct borders between central bank and government also safeguarded Norges Bank’s autonomy longer than in comparable countries after the outbreak of war. However, by the end of the war, Norges Bank had become one of the neutral central banks most interwoven with the state. Based on the historical development in different countries, the article questions the notion of the standard literature that lending to the state in a crisis was a central bank duty.     

Averting a global financial crisis: the US,the IMF,and the Mexican debt crisis of 1976

This article explains the politics and diplomacy of the initial use of an International Monetary Fund (IMF) adjustment program as a tactic in a strategy to avert a possible global banking crisis. Scholars typically date the strategy to the Reagan administration's response to the sovereign debt crises in Eastern Europe and Latin America in the early 1980s. This article demonstrates that the approach originated instead during the 1976 Mexican debt crisis – the first potential postwar default by a developing country that threatened international bank failures. Key US and Mexican officials recognized that an IMF program of currency devaluation and austerity would probably fail in its stated objective of reducing Mexico's balance of payments deficit. Nevertheless, US Treasury and Federal Reserve officials, fearing that a Mexican default might lead to bank failures and subsequent global financial crisis, intervened to an unprecedented degree in the negotiations between the IMF and Mexico. The United States offered direct financial support and worked through diplomatic channels to insist that Mexico accept an IMF adjustment program, as a way of bailing out US banks. Mexican president Luis Echeverría's administration consented to IMF adjustment because officials perceived it as the least politically costly option among a range of alternatives.     

Making Banks Fit for the People: Confidence,Democracy, and the Rise of Banking Alternatives in America, 1880–1914

At the turn of the twentieth century, many Americans lacked confidence in the nation's banks. In various ways, privately owned or operated banking institutions were viewed to be adverse to the interests of “the people.” Still, beginning in the late nineteenth century, deposit banking came to be accepted as a vital “public service.” This article explains how that happened and illustrates how multiple people-oriented alternatives gradually emerged. While these have been explored previously, this article demonstrates how new ideas about the importance of banking facilitated the emergence of a broad movement aimed at popular participation and control. To reveal this history and to gauge popular ideas, it favors materials that appeared within the public sphere. This approach demonstrates how underlying confidence issues motivated a broad movement that aimed to democratize banking institutions.     

Trans-border Exchange between Russia and China: The Case of Blagoveshchensk and Heihe

Two Russian-trained geographers investigate the multiple and largely informal and illicit forms of exchange between two provincial cities of roughly similar size located on opposite banks of the Amur River, namely Blagoveshchensk, in Russia's Far East, and Heihe, in neighboring northeast China. The study is based on interviews and field observations from 2002 to 2009 in Blagoveshchensk, as well as official statistics from the relevant Russian and Chinese provincial governments. Particular attention is focused on the activities and treatment of Chinese guest workers comprising a material component of the labor force in Amur Oblast (e.g., in construction and agriculture), unregistered Chinese entrepreneurs in retailing and catering, and trans-border logging operations of Chinese timber/wood products companies. Also covered are the activities of visiting Russian nationals in Heihe and the extralegal activities of Russian entrepreneurs and bureaucrats. Journal of Economic Literature, Classification Numbers: F20, J61, O17, O18. 5 figures, 1 table, 50 references.     

Foreign Banking in China: A Study of 279 Branch Units in 32 Cities

Two China-based geographers examine the gradual relaxation of restrictions on the activity of foreign banks in China as a prelude to a more focused investigation of the concentrated locational pattern of foreign banking in that country. The study, which embraces 32 Chinese cities, emphasizes the factors that have attracted foreign banks to particular cities and regions of China, including the existence of special banking opportunities, the so-called "follow-the customer" strategy, externalities associated with major financial centers such as Beijing and Shanghai, relaxed banking regimes in particular urban centers and special economic zones, and exposure to international trade and to a variety of foreign business enterprises. The locational preferences of foreign banks in relation to their countries of origin are addressed in some detail.     

Access to capital markets and the geography of productivity leaders and laggards

This paper examines whether access to the capital market of convertible and nonconvertible bonds affects total factor productivity (TFP) for the population of Italian joint stock manufacturing companies, based in highly segmented local financial markets, between 2007 and 2017. The hypothesis, well grounded in the literature, is that long-term capital favors investment in intangibles and other risky assets necessary for productivity growth. To identify this effect, we exploit the exogenous shock of the Italian banking deregulation of the mid-1990s as an instrument for firm-level access to capital, interacted with distance from logistic networks. These reforms changed the distribution of the type of branches at the local level, increasing the share of joint stock banks, which have high connections to international capital markets. This geographical reallocation of banking activities ultimately affected firms' financial structure, favouring their access to capital, even when based in peripheral financial areas. Firms which issued instruments of market debt achieved higher levels of productivity and a higher probability to reach top percentiles of productivity distribution.     

Immigration to Russia: Inevitability and Prospective Inflows

A U.S.-based geographer joins a senior Russian demographer in an effort to explore the potential flows of immigrants to Russia (principally from the Commonwealth of Independent States and to a lesser extent from China) to stem the country's recent population decline and compensate for looming decreases in the country's working-age inhabitants. More specifically, they examine the demand for immigration to Russia and assess the likelihood of three possible scenarios (high, medium, and low) to meet that demand by 2026. Particular attention is paid to the likely interplay of immigration and domestic migration in terms of its effects on the future distribution of migrants among Russia's federal districts. Journal of Economic Literature, Classification Numbers: F220, J110, J210, J610. 6 figures, 4 tables, 33 references.     

The United States Monopolization of Bank Note Production: Politics,Government, and the Greenback, 1862–1878

Abstract

Between 1862 and 1878, the view of the United States government towards the nation's money was transformed. Early in the Civil War, the government got into the bank note printing business out of necessity, printing and issuing the first-ever federal currency. Over the following years, debates raged whether the national currency should be printed privately or by the government's bank note printer, the United States Bureau of Engraving and Printing (BEP). Matters came to a head in 1878 when Congress debated the future of the BEP. That year, in a radical departure from the past, Congress gave the Bureau of Engraving and Printing a monopoly on the production of currency, forever changing the role of the government in the nation's economy. Money, be it in the form of coin or currency, was now the exclusive province of the government – not private banks or bank note companies. This change was the result of a rare consensus between Democrats and Republicans and between the forces of the antimonopoly tradition, Greenbackism, and hard money. For various reasons, they were unanimous in believing that the government, especially Congress, should be in control of those matters affecting the monetary affairs of the country.     

The money tree: Exploring central bank digital currency blockchain imaginaries

Central banks worldwide are developing, piloting and launching new central bank digital currencies (CBDCs). As the hub for the central banking community, the Bank for International Settlements (BIS) promotes a curiously botanical CBDC imaginary. From ‘money flowers’ to ‘tree trunks’ and a ‘strong canopy’, This helps to naturalize CBDC without clarifying its sociopolitical implications or envisioned monetary future, such as geopolitical tensions and financial fragmentation, new modes of financial interaction or the strengthened role of central banks. While omitting the paradoxes and ambivalences of CBDC, the imaginary of the BIS structures the enfolding discourses and allows the bank to function as a think tank for financial policy-making.     

A Geospatial Analysis of China's Exports, 1991-2008

Three Taiwan-based economists employ a range of exploratory spatial data analysis tools (e.g., Moran's I and LISA statistics) to investigate trends in the growth of China's exports over the period 1991-2008. A particular focus is on the detection of spatial correlations between China and 40 export destination countries in major world regions. Emphasis in the paper on the key years of 1991, 2001, 2006, and 2008 has enabled the authors to analyze the impacts on China's trade of such major events as the country's accession to the World Trade Organization and the global economic crisis of 2008-2009. The results of the spatial analysis reveal the continuing importance of the U.S. and Asian countries in China's export trade (despite changes in the character of trade relations) and identify the spatial outliers (e.g., in Latin America) that may serve as the basis for new export markets for China in the future.     

The Electoral Foundations of Japan's Banking Regulation

This article locates Japan's financial policies in the context of electoral incentives. The collapse of Japan's economic bubble in 1990 exposed the rot in the banking system, hidden for decades by a Liberal Democratic Party (LDP) government intent on maintaining favor with local support groups and protecting inefficient small banks. In a move wholly uncharacteristic of Japan's postwar politics, the LDP ultimately forced the banks to absorb huge losses rather than require taxpayers to bail out their mortgage-lending subsidiaries (jusen). We compare the government's subsequent bank bailout scheme with past government action and find that the government's objectives have shifted from boosting bank profits to ensuring their prudential regulation. We conclude on an optimistic note about the prospects for more public goods-oriented politics in Japan.     

Officer Country: Clothing and Personal Items From Cantonment Wilkinson (11PU282) in Southern Illinois

Abstract

Cantonment Wilkinson (11PU282) was a large but temporary U.S. Army post located on the banks of the Ohio River in present-day Pulaski County. Occupied by over 1,000 soldiers and their dependents for 18 months in 1801–1802, the post was abandoned in late 1802, with the post buildings subsequently occupied by Cherokee Indians and Euro-American squatters. Excavation of seven features at this site by SIUC archaeologists in 2003–2005 recovered a large artifact assemblage associated with the U.S. frontier army. This assemblage is particularly important in that it provides information on the poorlydocumented clothing and other items of the U.S. Army in the transitional period between the American Revolution and the War of 1812. The presence of officer-related silver, silver-plated, and gilded buttons within the clothing assemblage suggests that the features excavated by SIUC were primarily filled with refuse associated with the officers of the post rather than the enlisted men. The recovery of two unique personal items—a gold earring and an amber glass bead—attests to the minor presence of high-status officer's wives and possibly Cherokee Indians or other Native Americans at the post.     

Ukraine's Financial Crisis, 2009

A prominent specialist in the economic affairs of the former Soviet Union relates and analyzes the state of Ukraine's economy in light of a series of discussions and interviews with the country's Prime Minister and leading economic officials in Kyiv in 2008 and April 2009. The author, a former economic advisor to the country's government and co-chair of the UN's Blue Ribbon Commission for Ukraine, devotes this paper to a penetrating analysis of the impact of the global financial crisis of 2008-2009 on Ukraine's budget, banks, exchange rates, money supply, industrial sectors (particularly energy and steel), GDP, and inflationary pressures. Due attention is given to economic relations with the EU and Russia as well as to financial assistance from the IMF.Journal of Economic Literature, Classification Numbers: E500, E600, O520, P200. 1 table, 4 figures, 38 references.     

Russian Accession to the WTO: An Assessment

A senior World Bank economist presents a study focusing on issues controlling Russia's accession to the WTO in 2007. The paper discusses the principal reform commitments that Russia has made in an effort to become a member of the organization and addresses the question of whether the country faces excessive demands due to political considerations. While exploring such issues as potential relations with foreign exporters and investors, the author summarizes the relevant parts of his recent joint study of Russian import tariffs that casts a new light on a complex aspect of international trade. Among other problems relating to Russia's entry, he discusses in some detail branch banking and the tradedistorting subsidies in agriculture. Journal of Economic Literature, Classification Numbers: F13, F40, O19. 3 tables, 26 references.     

The Russian Stabilization Fund and Its Successor: Implications for Inflation

A senior Japanese specialist on Russia's economy and its oil- and gas-producing sectors analyzes the functions and performance of the Stabilization Fund of the Russian Federation and the new system replacing it in 2008. The Fund, created to diminish the effects of possible future decreases in oil prices on federal budget revenues and to absorb excess liquidity in the economy, was expected to exert a major curb on inflation. The author investigates the extent to which the latter, inflation-fighting role of the Fund has been fulfilled, given increases in the country's money supply and in state-regulated prices within the natural monopolies. Journal of Economic Literature, Classification Numbers: E50, E62, H20, H60. 4 figures, 5 tables, 25 references.