Banking Sector Competition in Russia

Abstract

The Russian banking sector includes
 approximately 1,000 banks, but is it competitive? This paper
 analyzes bank competition in Russia during 2002-2008. The
 authors examine indicators of concentration and
 contestability, and compute non-structural measures of
 competition. They compare competition in Russia to that in
 Brazil, China, and India, and contrast competition across
 different groups of banks within Russia. Contestability in
 Russia is obstructed by uneven supervisory practices and an
 unclear exit process. Non-structural measures reveal that
 banks in Russia are less competitive than those in Brazil.
 Within Russia, large banks and state-owned banks exert more
 market power than the smaller and privately-owned
 institutions. Finally, business-oriented banks are more
 competitive than those concentrating on lending to individuals.