National Research University - Higher School Of Economics

Faculty Economics

Department of Finance

DRAFT

of the paper

"Credit policy of the commercial bank"

Student : Soloviev A.P.

Group: 41BBA

Argument Consultant: Matovnikov M.Y.

Language Consultant: Guskova N.V.

Moscow 2013

Introduction	3
Chapter 1	5
1.1 Foreign banks in the European Union	5
1.2 Special case - Poland	6
1.3 Special case - Turkey	7
Chapter 2	9
2.1 Foreign banks in Russia until 1990-s	9
2.2 Nowadays of foreign banks in Russia	9
Chapter 3	11
Conclusions and Findings	12
Sources	13

Introduction.

Increasing flow of direct foreign investments into Russian economy and expanding integration process of the country into the world economy set new tasks and problems for contemporary Russian economists.

It is necessary to mention the fact that the established sector of foreign enterprises – affiliates, branches, joint-stock companies belonging to or controlled by non-residents – is being developed in contemporary Russia. Amid globalization there seems to happen the change of ideas about the notions of a “branch” and an “affiliate”. Due to this fact, there arises a necessity to shift the accent of the research from the issue of foreign investments access towards the analysis of our view of the foreign investments sector in Russia. Therefore, the research focuses on the financial sphere and, in particular, on commercial banks. This careful attention to the banks can account for three reasons. Firstly, despite the recognized significance of this sphere, the share of the foreign capital has exceeded 20% and the increase up to 30% is projected. Secondly, focusing the analysis on the bank sector instead of the whole financial sector, we set the aim to achieve the research results which to the utmost are applicable to the Russian reality. Russia is referred to a big group of countries where commercial banks play the greatest role in comparison with the other institutions of the financial market (investment banks, insurance companies, share funds and so on). And thirdly, for the purpose of the future professional activity it would be interesting to study the sphere issue in view of commercial banks.

This research also deals with theoretical issues of protectionism. The reason for this is that in the majority of the countries the policy regarding foreign banks was similar at one point – it included a significant protectionist component. Nowadays, within the context of development after the world financial and economic crisis, we can observe the revival of protectionism, and of investment protectionism in particular, which lies in setting the barriers for non-residents to buy assets in the given country.

Timeframes of the research cover the period starting with the 20th century, especially the second half of the 20th century, and finishing with the first decade of the 21st century. Since the 1960s there has been increase in international banking transactions all over the world. This was caused by the growth in the amounts of the foreign-trade transactions serviced by banks, the increase of direct foreign investments, weakening of the state control over the financial markets of many countries and strengthening of their interactions. Starting from 1980, the world economy can be characterized by the process of liberalization of domestic markets. This process resulted in transition from the system of highly-regulated segmented markets of separate countries to the more open system based on reduction of the direct state participation in the distribution of credit resources, in privatization of banks, in aggravation of competition.

International banking transactions may develop according to two scenarios: either by means of cross-border provision of bank services or by creation of branches and affiliates. From the beginning of the 1990s it was the second scenario that started to develop rapidly. During this period many countries changed quite fundamentally their attitude towards the access and regulation of foreign banks, thus having made it possible for them to gain significant positions in the national financial markets.

The timeliness of this research is specified by several reasons. Firstly, change of the economic conjuncture both in general and in particular (Russia joining the World Trade Organization). Secondly, the objective set by the country’s government to form one of the world financial centres in the Russian Federation. It is expected to be done due to the fact that the essence of the world financial centre lies in creation of considerable amounts of added value produced in the financial sphere. The intention to build such a centre means that, in particular, the banking sector is assumed not only to achieve the goal of provision with high-quality banking services but also to be able to concentrate the main amount of the added value created in this sphere here, in Russia.

The first chapter of this research will deal with the analysis of the literature on the following topics: international bank expansion; foreign banks in the Russian Federation; foreign banks in the European Union, the USA, Canada and East Asia. The second chapter will include performing the analysis and making the “diagnosis” of the international expansion. The third chapter will contain the economic model consisting of the analysis of the effectiveness of the local (Russian) commercial banks versus the effectiveness of foreign banks and the analysis of the dependence function of the foreign banks effectiveness from the effectiveness of the Russian banks.