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Рус Financial Journal Vol.12 No.3 2020
CONTENTS
Marina Yu. Malkina, Igor A. Moiseev
Endogeneity of Money Supply in the Russian Economy in the Context of the Monetary Regime Change, p. 8-27
Abstract
The article deals with the endogeneity of money supply in the Russian economy in the context of the changes made to the rules of monetary regulation. We summarized and analyzed the basic concepts of the modern theory of endogenous money, and described the approaches of various researchers to studying the impact of financial innovations and changes in the principles of monetary regulation on money supply endogeneity. In the empirical part of the research, in order to test the hypothesis on the endogenous origin of the money supply in the Russian economy in 2010–2018, we applied the Granger causality test and the Johansen cointegration test as well as VAR and VECM models. The study was based on the monthly data for the monetary sphere (M2 monetary aggregate, monetary base, and money multiplier), the banking sphere (loans, deposits, and interest rate) and the transactional sector of the economy (wholesale and retail turnover). We split the time series into two intervals: 2010–2013 and 2014–2018, because the monetary regime was being changed significantly throughout 2013–2014. As a result, the hypothesis of money supply endogeneity has not been rejected for both periods of time, and evidence of structuralism has been revealed. In the short term of 2010–2013, it was mainly commercial banks that reacted to an increase in money demand (through money multiplier); however, in the long run the Central Bank of Russia prevailed (through changing the monetary base). Nevertheless, in 2014–2018 the Bank of Russia demonstrated an efficient adjustment of money supply toward money demand, which had been reflected in the response of the monetary base in the short term. Meanwhile, in this period the role of commercial banks in lending was increased through operational managing of their own resources, which was reflected in the reaction of the money multiplier to the growth of business activity in the country. These changes indicated an amplification of money supply endogeneity in the Russian economy. In addition to passive adaptation, we revealed a particular activism in the monetary sphere, when the initiative of money emission came not so much from the monetary authorities as from commercial banks fighting for a market share in the face of intensified banking competition and reduced bank margins.
Keywords: theory of endogenous money supply, accommodationism, structuralism, cointegration of time series, Granger causality test, monetary policy
JEL: E51
Acknowledgements: The reported study was funded by the Russian Foundation for Basic Research (RFBR) according to research project No. 19-010-00716.
For citation: Malkina M.Yu., Moiseev I.A. Endogeneity of Money Supply in the Russian Economy in the Context of the Monetary Regime Change. Financial Journal, 2020, vol. 12, no. 3, pp. 8–27 (In Russ.). DOI: 10.31107/2075-1990-2020-3-8-27.
Mikhail V. Milchakov
Execution of National Projects in Regions Under the Conditions of Countering the Coronavirus Pandemic, p. 28-47
Abstract
Under modern conditions, national projects have become the basis for the socioeconomic development of Russian regions. This emphasizes the importance of an adequate financial support for national projects’ performance, taking into account regional features. The support to regions for national projects’ execution takes about 1/3 of the total sum of intergovernmental grants from the federal budget to regions. The level of regional involvement in national projects’ execution varies to some extent: about 30 regions are characterized by having a 10–15% share of federal aid for execution of national projects in the total sum of the revenue base, whereas 32 regions have a 5–10% share. In this paper, the author gives an assessment of regional budgets’ stability taking into account the measures of countering the coronavirus pandemic in line with three scenarios. The paper includes the results of possible revenue falls in regional budgets. The author presents recommendations for the enhancement of national projects’ management in case of the “severe” scenario of the pandemic.
Keywords: intergovernmental fiscal relations, intergovernmental transfers, national projects, general grants, block grants, budgets of Russian regions, coronavirus infection, pandemic, COVID-19
JEL: H61, H72, H77, R58
For citation: Milchakov M.V. Execution of National Projects in Regions Under the Conditions of Countering the Coronavirus Pandemic. Financial Journal, 2020, vol. 12, no. 3, pp. 28–47 (In Russ.). DOI: 10.31107/2075-1990-2020-3- 28-47.
Irina V. Kiviko, Nina I. Malis
Tax Potential of the Republic of Crimea, p. 48-59
Abstract
The entry of the Republic of Crimea into the Russian Federation created problems of the republic’s adaptation to the budget and tax legislation of Russia. Most of these problems have already been resolved, but a number of questions still remain. The application of the Russian tax legislation in Crimea initially led to a fall in the regional budget’s own revenues, but gradually the situation began to improve. In order to develop business in the territory of the Republic of Crimea, it was necessary to apply a flexible tax mechanism, including the creation of a free economic zone and varying tax rates for special tax regimes, and this task is being consistently solved. The main objective of the present time is to reduce the shadow economy through tax administration as well as to introduce a tax on professional income and a mechanism for registering real estate. The proposed abolition of the single imputed income tax, making up a substantial income for local authorities, cannot be offset by a patent tax form or other sources. It is necessary to change the budget legislation on the distribution of tax revenues between local budgets according to both basic taxes and special tax regimes—even in the face of increased personal income tax revenues as a result of growth in the tax base and the inclusion of separate divisions in regional taxpayers.
Keywords: Republic of Crimea, tax policy, budget, income, personal income tax, income tax, special tax regimes, tax potential
JEL: Е63, Н22
For citation: Kiviko I.V., Malis N.I. Tax Potential of the Republic of Crimea. Financial Journal, 2020, vol. 12, no. 3, pp. 48–59 (In Russ.). DOI: 10.31107/2075-1990-2020-3-48-59.
Valentina V. Derbeneva, Ekaterina А. Zakharchuk, Alexey F. Pasynkov
Development of Initiative Budgeting in the Regions of the Russian Federation (Exemplified by the Sverdlovsk Region), p. 60-75
Abstract
The article discusses the experience of implementing the practice of proactive budgeting in the Russian regions. A review of Russian and foreign experience has revealed that a unique experience and a special form of budgeting based on public participation are taking shape in our country, and therefore, comparative analysis of the global and domestic effectiveness of such practices is significantly impeded. In this regard, it is shown that in domestic literature there has not yet been a single approach to assessing the effectiveness of initiative budgeting. Exemplified by the Sverdlovsk region, the experience of implementing proactive budgeting in the regions is considered, and specific features of initiative budgeting practice implementation as well as the structure and directions of the use of financial resources in the municipalities of the regions are identified. In the framework of proactive budgeting, the special experience of Yekaterinburg is highlighted, which has been developing proactive budgeting in the municipality at its own expense, without co-financing from the regional budget, since 2019. In conclusion, the general problems and features of municipalities in the Sverdlovsk region that arise during the implementation of initiative budgeting practices are outlined. The main factors of successful inclusion of municipalities in initiative budgeting programs are the initiative of local authorities and the standard of living of the territory’s population.
Keywords: initiative budgeting, Sverdlovsk region, municipalities, co-financing, self-imposition of citizens
JEL: H72, H76, H79
Acknowledgement: The publication was prepared in accordance with the state task for the Institute of Economics of the Ural Branch of the Russian Academy of Sciences for 2020–2022.
For citation: Derbeneva V.V., Zakharchuk E.A., Pasynkov A.F. Development of Initiative Budgeting in the Regions of the Russian Federation (Exemplified by the Sverdlovsk Region). Financial Journal, 2020, vol. 12, no. 3, pp. 60–75 (In Russ.). DOI: 10.31107/2075-1990-2020-3-60-75.
Denis V. Bryzgalov, Julia V. Gryzenkova, Alexander A. Tsyganov
Prospects for Digitalization of the Insurance Business in Russia, p. 76-90
Abstract
Subject matter. Insurance and insurance activities in the digital economy. Topic. The relevance of the topic is due to the need to determine the specifics of insurance in the digital economy as well as to conduct a study to assess the practical application of new digital technologies in the Russian insurance market. In the existing works by Russian and foreign authors, the problems of practical use of digitalization processes by Russian insurers have not been systematically considered. Goal. Theoretical justification for changes in the insurance category in the context of economy digitalization and the study of practical implementation of digital technologies in the Russian insurance market. Method. The paper considers the results of a market study of 30 leading Russian insurers on the digitalization of the insurance market, aimed at identifying the problems and prospects of this process in Russia. Results. The theoretical definition of digital insurance is given, and its duality in the digital economy is shown, associated with the insurance of specific digital risks and with the introduction of new digital technologies (digitalization). Digitalization indicators of insurance activities have been developed and calculated—in particular, the indicator of the use and penetration of digital technologies. The results of a study on the demand for new digital technologies for business processes among insurance companies are reviewed and explained. Digital risks are classified, and the features of the implementation of cyber risks as well as the risks of artificial intelligence and the Internet of things are shown. The prospects for the use of digital technologies by insurers in the near future are estimated. Scope. The results of the study can be used by insurance companies to assess the competitive environment in terms of the use of digital technologies and in the strategic planning process, as well as by government bodies to assess the state of affairs and prospects of the insurance market's participation in digital economy formation.
Keywords: digital insurance, digitalization, insurance market, digital technologies, digital economy
JEL: G22, M15
For citation: Bryzgalov D.V., Gryzenkova Ju.V. Tsyganov A.A. Prospects for Digitalization of the Insurance Business in Russia. Financial Journal, 2020, vol. 12, no. 3, pp. 76–90 (In Russ.). DOI: 10.31107/2075-1990-2020-3-76-90.
Lyubov A. Petrova, Tatyana E. Kuznetsova
Digitalization in the Banking Industry: Digital Transformation of Environment and Business Processes, p. 91-101
Abstract
The article presents the key aspects of the banking sector’s development in the conditions of digitalization: trends in the development of digital technologies of banks as well as changes in business processes, banking products and services, service models and development of banks’ own ecosystems occurring under their influence. Analysis of domestic and foreign practices of using digital technologies in planning, monitoring and evaluation of management decisions made it possible to formulate proposals on priority areas of application of digital technologies within the framework of further mastering the principles and procedures in management based on results. The study determines that digital transformation of environment and business processes will be the main direction of development for any business, including banking. Moreover, the development of the banking system through the use of end-to-end technologies will solve many problems. For example, end-to-end technologies such as machine learning, artificial intelligence, blockchain, P2P lending, and robotics will accelerate technological change; personalize offers; increase the speed of banking operations; improve the accuracy of calculations; and reduce the risk of intentional distortion of reporting data. Methods of analysis, modeling and analogy were used in setting and solving problems. The study defines the concept of a digital bank; identifies problems and prospects for digital applications in the banking sector; and proposes the main directions for achieving success in digital transformation of environment and business processes within banks.
Keywords: digital bank, banking sector, digital technologies, omnichannel service method, machine learning, artificial intelligence, blockchain
JEL: G20
For citation: Petrova L.A. Kuznetsova T.E. Digitalization in the Banking Industry: Digital Transformation of Environment and Business Processes. Financial Journal, 2020, vol. 13, no. 3, pp. 91–101 (In Russ.). DOI: 10.31107/2075- 1990-2020-3-91-101.
Sergey A. Perekhod
Macroeconomic Stability and Microprudential Regulation of Russia’s Foreign Corporate Debt, p. 102-113
Abstract
The article is devoted to the study of the risks of external corporate debt and instruments for leveling current shocks (sanctions, global recession due to the COVID-19 pandemic and low oil prices) for macroeconomic stability. A detailed decomposition has been carried out, and an analysis of probable vulnerabilities has been performed; a conclusion is drawn about the most important aspects, namely the redistribution of obligations on public finances. Based on a sample of debt dynamics for 2006–2019 (56 observations), a more active increase in borrowing by state-owned companies is revealed (compared with the private sector), and the concept of “state support option” is introduced. The definition of financial stability in the context of debt sustainability is clarified. The strategy is based on issues related to threats to countries. The micro- and macroprudential approaches are compared with the features of their application in an open economy.
Keywords: external corporate debt, macroprudential policy, financial stability, risk management
JEL: F34, H63, G32
For citation: Perekhod S.A. Macroeconomic Stability and Microprudential Regulation of Russia’s Foreign Corporate Debt. Financial Journal, 2020, vol. 12, no. 3, pp. 102–113 (In Russ.). DOI: 10.31107/2075-1990-2020-3-102-113.
Naeim D. Hurmuz
Performance Management in the Public Sector: Opportunities for Syria (Russian, English), p. 114-135
Abstract
The relevance of the article is due to the fact that in the context of the state and legal reform in Syria, the problem of improving the efficiency of public administration and its individual elements is becoming particularly relevant. The current system of social standards and guarantees has proved itself unsuitable for the conditions of a market economy. Growing problems in the economy — a drop in GDP, a decrease in budget revenues and an increase in budget deficit — exacerbate social problems and reduce access to public services. In this connection, the limited budget funds have significantly reduced public consumption funds and, as a result, certain services have become almost inaccessible under low household purchasing power. The article substantiates the need for modernization in the management system that would meet the requirements of a democratic state with a socially oriented economy. Modernization should be aimed primarily at the introduction of budgeting and systems that contribute to the improvement of services provided by public authorities. Theoretical and methodological understanding of the improvement processes in the activities of the state authorities of Syria, as well as other states that are in similar conditions, has led to the conclusion on the relevance of the transition from obsolete forms and methods of management to modern ones, where the goal setting and implementation of tasks to achieve the goals are carried out within each individual management entity, and goal setting is focused on a clearly defined result. It is proved that such a mechanism can be the introduction of budgeting and performance management in public administration.
Keywords: performance management, focus on results, goals, local governments, state power
JEL: H11, H50, P21
For citation: Hurmuz N.D. Performance Management in the Public Sector: Opportunities for Syria. Financial Journal, 2020, vol. 12, no. 3, pp. 114–135. DOI: 10.31107/2075-1990-2020-3-114-135.
