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Andrei Vernikov

Explicit Deposit Guarantee in Russia: Who Needed It and What For?

2019. Vol. 20. No. 2. P. 104–121 [issue contents]
The article sheds light on the circumstances preceding the enactment of explicit deposit insurance in Russia in December 2003. It may help to understand the subsequent performance of this institution. The author relies on available banking statistics as well as qualitative information of different natures. The formal deposit guarantee emerged in countries with advanced market economies and financial systems in the absence of state-owned banks. In Russia, a small group of politicians and experts started promoting deposit insurance since 1993. The main interest groups, such as core deposit-taking banks and their depositors, presented little demand for law in this domain. The advantages of an explicit scheme were unclear in the Russian context because the bulk of household deposits were kept in a state-owned savings bank. Material conditions were not mature in the 1990s: the government was financially weak, market economy institutions were missing, and the banking sector embraced many improper players. Deposit guarantee was incapable of addressing the main concern of the households, namely how to recover the savings lost due to hyperinflation in the early 1990s. The author assumes that the champions of deposit guarantee in Russia were driven by a combination of motivations: idealism and good intentions influenced by the experiences of the United States and other countries, or the “demonstration effect”; the desire to disrupt the monopoly of Sberbank and boost the competitiveness of privately-owned commercial banks in order to boost bank competition, just for the sake of it; and the search for a new field of activity for a certain clan of civil servants and politicians. The conclusion is that subjective factors were the ones underpinning the debate around deposit insurance law.
Citation: (2019) Komu i zachem bylo nuzhno garantirovanie bankovskikh vkladov? [Explicit Deposit Guarantee in Russia: Who Needed It and What For?]. Economic Sociology, vol. 20, no 2, pp. 104-121 (in Russian)
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