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Institutional inequality by level of access to funding through REPO transactions: Evidence from Russian banks

Vol. 25, Iss. 3, MARCH 2019

Received: 30 November 2018

Received in revised form: 14 December 2018

Accepted: 28 December 2018

Available online: 29 March 2019

Subject Heading: Banking

JEL Classification: B52, G21, G28, G32, G34

Pages: 514–532

https://doi.org/10.24891/fc.25.3.514

Blokhin A.A. Institute of Economic Forecasting of RAS (IEF RAS), Moscow, Russian Federation
andraleks@rambler.ru

https://orcid.org/0000-0003-2132-4664

Sternik S.G. Institute of Economic Forecasting of RAS (IEF RAS), Moscow, Russian Federation
sgs728@mail.ru

https://orcid.org/0000-0003-1411-1011

Bliznyak A.B. Institute of Economic Forecasting of RAS (IEF RAS), Moscow, Russian Federation
albli@mail.ru

https://orcid.org/0000-0002-3866-7148

Teleshev G.V. Institute of Economic Forecasting of RAS (IEF RAS), Moscow, Russian Federation
gteleshev@gmail.com

https://orcid.org/0000-0003-1016-6111

Subject This article analyzes the use of repo transactions by banks and the Bank of Russia as an important mechanism of regulation and increase of liquidity of the banking sector. It considers the risks of using repo transactions by banks to optimize the reporting, that take place in international practice.
Objectives The article aims to study and describe repo transactions and institutional inequalities in access to financing through the use of repo mechanism by systemically important financial institutions and other banks.
Methods For the study, we used the methods of logical analysis.
Results The article notes the existence of institutional differences in banks' access to finance through the use of the repo mechanism. It considers a case of a small regional bank involved in active repo transactions in comparison with a systemically important financial institution.
Conclusions The Russian banking sector undergoes significant transformation and consolidation. Small credit organizations are under considerable pressure, which often force them to resort to higher levels of risk. However, this measure does not help them avoid falling into a peculiar "institutional trap" of access to financing (including using the repo mechanism) in comparison with systemically important financial institutions.

Keywords: REPO, institutional conditions, difference, institutional rent, systemically important banks

References:

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