Old habits die hard: Fiscal imperatives, state regulation and the role of Russia's banks

Europe - Asia Studies

Volumn 49, Issue 7, 1997, Pages 1159-1185

  Tompson, William ^a  

^a UNIVERSITY OF LONDON   (United Kingdom)

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[No Author keywords available]

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EID: 0000308133     PISSN: 09668136     EISSN: None     Source Type: Journal    
DOI: 10.1080/09668139708412495     Document Type: Article

References (282)

1. Alec Nove, The Soviet Economic System, 3rd edn (London, George Allen & Unwin, 1986), p. 250.
2. Nezavisimaya gazeta, 18 July 1996, p. 4.
3. Elena Zhuravskaya, The First Stage of Banking Reform in Russia is Completed: What Lies Ahead?', in Jacek Rostowski (ed.), Banking Reform in Central Europe and the Former Soviet Union (Budapest, CEU Press, 1995), p. 167.
4. Oliver Prill, Financial Sector Reform in the Soviet Union/Russia since 1987: Options and Consequences (D.Phil Thesis, University of Oxford, 1995), p. 4; Joseph E. Stiglitz, Financial System Design for Eastern Europe's Emerging Democracies (International Center for Economic Growth Occasional papers no. 38, 1992), p. 8. Bank privatisation, for example, has been a bigger headache in Central Europe than in Russia, and Yugoslavia's socialist two-tier system was the source of enormous problems when the market transformation began.
5. Oliver Prill, Financial Sector Reform in the Soviet Union/Russia since 1987: Options and Consequences (D.Phil Thesis, University of Oxford, 1995), p. 4; Joseph E. Stiglitz, Financial System Design for Eastern Europe's Emerging Democracies (International Center for Economic Growth Occasional papers no. 38, 1992), p. 8. Bank privatisation, for example, has been a bigger headache in Central Europe than in Russia, and Yugoslavia's socialist two-tier system was the source of enormous problems when the market transformation began.
6. See, in particular, Joel Hellman, 'Bureaucrats vs. Markets? Rethinking the Bureaucratic Response to Market Reform in Centrally Planned Economies', in Susan Gross Solomon (ed.), Beyond Sovietology: Essays in Politics and History (London, M.E. Sharpe, 1993); Juliet Ellen Johnson, 'The Russian Banking System: Institutional Responses to the Market Transition', Europe-Asia Studies, 46, 6, 1994, pp. 971-995; and Juliet Johnson, 'Banking in Russia: Shadows of the Past', Problems of Post-Communism, 43, 3, May-June 1996, pp. 49-59.
7. See, in particular, Joel Hellman, 'Bureaucrats vs. Markets? Rethinking the Bureaucratic Response to Market Reform in Centrally Planned Economies', in Susan Gross Solomon (ed.), Beyond Sovietology: Essays in Politics and History (London, M.E. Sharpe, 1993); Juliet Ellen Johnson, 'The Russian Banking System: Institutional Responses to the Market Transition', Europe-Asia Studies, 46, 6, 1994, pp. 971-995; and Juliet Johnson, 'Banking in Russia: Shadows of the Past', Problems of Post-Communism, 43, 3, May-June 1996, pp. 49-59.
8. See, in particular, Joel Hellman, 'Bureaucrats vs. Markets? Rethinking the Bureaucratic Response to Market Reform in Centrally Planned Economies', in Susan Gross Solomon (ed.), Beyond Sovietology: Essays in Politics and History (London, M.E. Sharpe, 1993); Juliet Ellen Johnson, 'The Russian Banking System: Institutional Responses to the Market Transition', Europe-Asia Studies, 46, 6, 1994, pp. 971-995; and Juliet Johnson, 'Banking in Russia: Shadows of the Past', Problems of Post-Communism, 43, 3, May-June 1996, pp. 49-59.
9. This was the basis for the enormous power of the industrial ministries, in particular. See Stephen Whitefield, Industrial Power and the Soviet State (Oxford, Clarendon Press, 1993).
10. For an excellent discussion of this issue in a post-Soviet context, see David Woodruff, 'Beyond the Rouble: The Politics of Monetary Consolidation in Russia', unpublished paper presented at the AAASS Annual Convention, Boston, MA, November 1996, esp. at pp. 1-3.
11. In late 1996 it was estimated that roughly 25% of Russian banks were operating at a loss; a further third were experiencing declining profits; Finansovye izvestiya, 31 October 1996, p. I, and 12 November 1996, p. III. It is worth noting that the total assets of the loss makers amounted to an estimated 52.5 trillion rubles, which would, if the tax proposals now before parliament were in force, be subject to a 1% 'profit tax'. Aleksandr Khandruev, 'Kreditnaya politika i nalogovye perspektivy', Ekonomicheskava zhizn (henceforth EZh), 1996, 49 (December), p. 3.
12. In late 1996 it was estimated that roughly 25% of Russian banks were operating at a loss; a further third were experiencing declining profits; Finansovye izvestiya, 31 October 1996, p. I, and 12 November 1996, p. III. It is worth noting that the total assets of the loss makers amounted to an estimated 52.5 trillion rubles, which would, if the tax proposals now before parliament were in force, be subject to a 1% 'profit tax'. Aleksandr Khandruev, 'Kreditnaya politika i nalogovye perspektivy', Ekonomicheskava zhizn (henceforth EZh), 1996, 49 (December), p. 3.
13. Prill; pp. 95-109.
14. For a comprehensive account of the 'traditional' Soviet monobank system, see George Garvy, Money, Financial Flows and Credit in the Soviet Union (New York, National Bureau of Economic Research, 1977).
15. The only financial instruments which existed were cash and bank accounts; there were no negotiable debt instruments such as bonds. Nor did banks lend to households.
16. Izvestiya, 5 March 1992, p. 2, and 26 March 1993, p. 2.
17. Alfred Steinherr & Daniel Gros, Winds of Change: Economic Transition in Central and Eastern Europe (London, Longman, 1995), p. 52.
18. Barry W. Ickes & Randi Ryterman, 'The Interenterprise Arrears Crisis in Russia', Post-Soviet Affairs, 8, 4, 1992, p. 344.
19. Philip Hanson, 'The Serendipitous Soviet Achievement of Full Employment: Labour Shortage and Labour Hoarding in the Soviet Economy', in David Lane (ed.), Labour and Employment in the USSR (Wheatsheaf, 1986), p. 94.
20. For an excellent account of pre-1992 banking reform, see Hellman, 'Bureaucrats vs Markets'.
21. It is significant in this context that many of the new banks could write credits on the inter-branch turnover (i.e. creating money), effectively acting as central banks in their own right; Jacek Rostowski, 'Introduction', in Rostowski (ed.), Banking Reform, p. 8.
22. Grazhdunskii kodeks Rossiiskoi Federatsii, chast' vtoraya (Moscow, 1996), stst. 834-860.
23. See Vasilii Vitryansky, 'Paradoksy normotvorchestva: zakon dolzhen byt' dlya vsekh edin', EZh, 1996, 48 (November), pp. 4-5. The Association of Russian Banks has also complained about this; see Biznes i banki, 30 April 1997.
24. See Vasilii Vitryansky, 'Paradoksy normotvorchestva: zakon dolzhen byt' dlya vsekh edin', EZh, 1996, 48 (November), pp. 4-5. The Association of Russian Banks has also complained about this; see Biznes i banki, 30 April 1997.
25. This sub-section might better be titled 'O kul'te nalichnosti i ego posledstviyakh', or perhaps 'O roli nalichnosti v istorii Rossii'.
26. Vedomosti S"ezda Narodnykh Deputatov RSFSR i Verkhovnogo Soveta RSFSR (hereafter simply Vedomosti), 1992, 5 (30 January), st. 196; see also Vedomosti, 1992, 25 (25 June), st. 1418; and Byulleten' normativnykh aktov ministerstv i vedomstv Rossiiskoi Federatsii (hereafter simply BNA) 1993, 10, p. 61.
27. Vedomosti S"ezda Narodnykh Deputatov RSFSR i Verkhovnogo Soveta RSFSR (hereafter simply Vedomosti), 1992, 5 (30 January), st. 196; see also Vedomosti, 1992, 25 (25 June), st. 1418; and Byulleten' normativnykh aktov ministerstv i vedomstv Rossiiskoi Federatsii (hereafter simply BNA) 1993, 10, p. 61.
28. Vedomosti S"ezda Narodnykh Deputatov RSFSR i Verkhovnogo Soveta RSFSR (hereafter simply Vedomosti), 1992, 5 (30 January), st. 196; see also Vedomosti, 1992, 25 (25 June), st. 1418; and Byulleten' normativnykh aktov ministerstv i vedomstv Rossiiskoi Federatsii (hereafter simply BNA) 1993, 10, p. 61.
29. EZh, 1996, 49 (December), p. 20; the most recent TsBR formulation of this frequently changing rule appears in EZh, 1997, 20 (May), p. 16.
30. EZh, 1996, 49 (December), p. 20; the most recent TsBR formulation of this frequently changing rule appears in EZh, 1997, 20 (May), p. 16.
31. Sobranie zakonodatel'stva Rossiiskoi Federatsii (hereafter simply SZRF), 1994, 31 (28 November), st. 3276; BNA, 1994, 12, pp. 23-24. The previous limit, in force until late 1994, was 500 000 rubles. The limits set for particular categories of expenditure are periodically readjusted for inflation; see, for example, BNA. 1993, 4, p. 64; 1993, 8, p. 58; 1993, 10, p. 61; and so on. In 1994 the limit for inter-enterprise transactions involving the purchase of fuels and lubricants (goryuchosmazochnye materialy) was raised to 5 million rubles (Pis'mo Tsentral'nogo Banka Rossiiskoi Federatsii, No 14-4/95, 16 March 1994, point 14), as was that for consumers' cooperatives purchasing agricultural produce; EZh, 1996, 42 (October), p. 27; and 1996, 49 (December), p. 20.
32. Sobranie zakonodatel'stva Rossiiskoi Federatsii (hereafter simply SZRF), 1994, 31 (28 November), st. 3276; BNA, 1994, 12, pp. 23-24. The previous limit, in force until late 1994, was 500 000 rubles. The limits set for particular categories of expenditure are periodically readjusted for inflation; see, for example, BNA. 1993, 4, p. 64; 1993, 8, p. 58; 1993, 10, p. 61; and so on. In 1994 the limit for inter-enterprise transactions involving the purchase of fuels and lubricants (goryuchosmazochnye materialy) was raised to 5 million rubles (Pis'mo Tsentral'nogo Banka Rossiiskoi Federatsii, No 14-4/95, 16 March 1994, point 14), as was that for consumers' cooperatives purchasing agricultural produce; EZh, 1996, 42 (October), p. 27; and 1996, 49 (December), p. 20.
33. Sobranie zakonodatel'stva Rossiiskoi Federatsii (hereafter simply SZRF), 1994, 31 (28 November), st. 3276; BNA, 1994, 12, pp. 23-24. The previous limit, in force until late 1994, was 500 000 rubles. The limits set for particular categories of expenditure are periodically readjusted for inflation; see, for example, BNA. 1993, 4, p. 64; 1993, 8, p. 58; 1993, 10, p. 61; and so on. In 1994 the limit for inter-enterprise transactions involving the purchase of fuels and lubricants (goryuchosmazochnye materialy) was raised to 5 million rubles (Pis'mo Tsentral'nogo Banka Rossiiskoi Federatsii, No 14-4/95, 16 March 1994, point 14), as was that for consumers' cooperatives purchasing agricultural produce; EZh, 1996, 42 (October), p. 27; and 1996, 49 (December), p. 20.
34. Sobranie zakonodatel'stva Rossiiskoi Federatsii (hereafter simply SZRF), 1994, 31 (28 November), st. 3276; BNA, 1994, 12, pp. 23-24. The previous limit, in force until late 1994, was 500 000 rubles. The limits set for particular categories of expenditure are periodically readjusted for inflation; see, for example, BNA. 1993, 4, p. 64; 1993, 8, p. 58; 1993, 10, p. 61; and so on. In 1994 the limit for inter-enterprise transactions involving the purchase of fuels and lubricants (goryuchosmazochnye materialy) was raised to 5 million rubles (Pis'mo Tsentral'nogo Banka Rossiiskoi Federatsii, No 14-4/95, 16 March 1994, point 14), as was that for consumers' cooperatives purchasing agricultural produce; EZh, 1996, 42 (October), p. 27; and 1996, 49 (December), p. 20.
35. Sobranie zakonodatel'stva Rossiiskoi Federatsii (hereafter simply SZRF), 1994, 31 (28 November), st. 3276; BNA, 1994, 12, pp. 23-24. The previous limit, in force until late 1994, was 500 000 rubles. The limits set for particular categories of expenditure are periodically readjusted for inflation; see, for example, BNA. 1993, 4, p. 64; 1993, 8, p. 58; 1993, 10, p. 61; and so on. In 1994 the limit for inter-enterprise transactions involving the purchase of fuels and lubricants (goryuchosmazochnye materialy) was raised to 5 million rubles (Pis'mo Tsentral'nogo Banka Rossiiskoi Federatsii, No 14-4/95, 16 March 1994, point 14), as was that for consumers' cooperatives purchasing agricultural produce; EZh, 1996, 42 (October), p. 27; and 1996, 49 (December), p. 20.
36. Sobranie zakonodatel'stva Rossiiskoi Federatsii (hereafter simply SZRF), 1994, 31 (28 November), st. 3276; BNA, 1994, 12, pp. 23-24. The previous limit, in force until late 1994, was 500 000 rubles. The limits set for particular categories of expenditure are periodically readjusted for inflation; see, for example, BNA. 1993, 4, p. 64; 1993, 8, p. 58; 1993, 10, p. 61; and so on. In 1994 the limit for inter-enterprise transactions involving the purchase of fuels and lubricants (goryuchosmazochnye materialy) was raised to 5 million rubles (Pis'mo Tsentral'nogo Banka Rossiiskoi Federatsii, No 14-4/95, 16 March 1994, point 14), as was that for consumers' cooperatives purchasing agricultural produce; EZh, 1996, 42 (October), p. 27; and 1996, 49 (December), p. 20.
37. Sobranie zakonodatel'stva Rossiiskoi Federatsii (hereafter simply SZRF), 1994, 31 (28 November), st. 3276; BNA, 1994, 12, pp. 23-24. The previous limit, in force until late 1994, was 500 000 rubles. The limits set for particular categories of expenditure are periodically readjusted for inflation; see, for example, BNA. 1993, 4, p. 64; 1993, 8, p. 58; 1993, 10, p. 61; and so on. In 1994 the limit for inter-enterprise transactions involving the purchase of fuels and lubricants (goryuchosmazochnye materialy) was raised to 5 million rubles (Pis'mo Tsentral'nogo Banka Rossiiskoi Federatsii, No 14-4/95, 16 March 1994, point 14), as was that for consumers' cooperatives purchasing agricultural produce; EZh, 1996, 42 (October), p. 27; and 1996, 49 (December), p. 20.
38. Sobranie zakonodatel'stva Rossiiskoi Federatsii (hereafter simply SZRF), 1994, 31 (28 November), st. 3276; BNA, 1994, 12, pp. 23-24. The previous limit, in force until late 1994, was 500 000 rubles. The limits set for particular categories of expenditure are periodically readjusted for inflation; see, for example, BNA. 1993, 4, p. 64; 1993, 8, p. 58; 1993, 10, p. 61; and so on. In 1994 the limit for inter-enterprise transactions involving the purchase of fuels and lubricants (goryuchosmazochnye materialy) was raised to 5 million rubles (Pis'mo Tsentral'nogo Banka Rossiiskoi Federatsii, No 14-4/95, 16 March 1994, point 14), as was that for consumers' cooperatives purchasing agricultural produce; EZh, 1996, 42 (October), p. 27; and 1996, 49 (December), p. 20.
39. BNA, 1994, 12, p. 23.
40. Vedomosti, 1992, 5 (30 January), st. 196; 1992, 25 (25 June), st. 1418; and 1992, 43 (29 October), st. 2406; Sobraniya aktov prezidenta i pravitel'stva Rossiiskoi Federatsii, 1993, 28 (12 July), st. 2598.
41. Vedomosti, 1992, 5 (30 January), st. 196; 1992, 25 (25 June), st. 1418; and 1992, 43 (29 October), st. 2406; Sobraniya aktov prezidenta i pravitel'stva Rossiiskoi Federatsii, 1993, 28 (12 July), st. 2598.
42. Vedomosti, 1992, 5 (30 January), st. 196; 1992, 25 (25 June), st. 1418; and 1992, 43 (29 October), st. 2406; Sobraniya aktov prezidenta i pravitel'stva Rossiiskoi Federatsii, 1993, 28 (12 July), st. 2598.
43. Vedomosti, 1992, 5 (30 January), st. 196; 1992, 25 (25 June), st. 1418; and 1992, 43 (29 October), st. 2406; Sobraniya aktov prezidenta i pravitel'stva Rossiiskoi Federatsii, 1993, 28 (12 July), st. 2598.
44. Vedomosti, 1992, (30 January), st. 196; BNA, 1994, 12, pp. 23-24.
45. Vedomosti, 1992, (30 January), st. 196; BNA, 1994, 12, pp. 23-24.
46. EZh, 1996, 42 (October), p. 27; and 1996, 49 (December), p. 20.
47. EZh, 1996, 42 (October), p. 27; and 1996, 49 (December), p. 20.
48. Novgorodskie vedomosti, 1 March 1997; EZh, 1997, 20 (May), p. 16.
49. Novgorodskie vedomosti, 1 March 1997; EZh, 1997, 20 (May), p. 16.
50. This would seem to be the main reason why the IMF and Russia's Western advisers did not insist on the rapid unification of the two circuits. For a discussion of this aspect of the problem, see Steinherr & Gros, pp. 382-387. Ickes & Ryterman take a less sanguine view of the implications of this arrangement on Russian inflation; see 'Interenterprise Arrears', p. 350.
51. This would seem to be the main reason why the IMF and Russia's Western advisers did not insist on the rapid unification of the two circuits. For a discussion of this aspect of the problem, see Steinherr & Gros, pp. 382-387. Ickes & Ryterman take a less sanguine view of the implications of this arrangement on Russian inflation; see 'Interenterprise Arrears', p. 350.
52. Ickes & Ryterman, 'Interenterprise Arrears', p. 344.
53. Patrick Conway, The Economics of Cash Shortage (Washington, IBRD, 1994), pp. 2-14.
54. However, Ickes & Ryterman show that the inter-enterprise arrears crisis was aggravated by the fact that credit growth in non-cash outpaced emissions of cash in 1992. See Ickes & Ryterman, 'Interenterprise Arrears', pp. 344-345.
55. Finansovye izvestiya, 26 December 1996, p. V. The share of cash in M2 appears to be the determining factor in the relationship: central bank emissions policies, rather than tax regulations or the activities of anti-cash commissions, determine the effect of the dual circuit on the ruble.
56. Stephen S. Moody, 'Decapitalizing Russian Capitalism', Orbis, 40, 1, Winter 1996, p. 127, text and n. 16; Moody also points out that the dual circuit distorts the measurement of monetary aggregates (p. 124). See also Ickes & Ryterman, 'Interenterprise Arrears', p. 344, n. 38. Lev Makarevich wrote in late 1996 that 'the legal ruble remains a fiction; it is absolutely useless as a unit of value, as the "commodity of all commodities" '; Finansovye izvestiya, 31 October 1996, p. IV.
57. Stephen S. Moody, 'Decapitalizing Russian Capitalism', Orbis, 40, 1, Winter 1996, p. 127, text and n. 16; Moody also points out that the dual circuit distorts the measurement of monetary aggregates (p. 124). See also Ickes & Ryterman, 'Interenterprise Arrears', p. 344, n. 38. Lev Makarevich wrote in late 1996 that 'the legal ruble remains a fiction; it is absolutely useless as a unit of value, as the "commodity of all commodities" '; Finansovye izvestiya, 31 October 1996, p. IV.
58. Stephen S. Moody, 'Decapitalizing Russian Capitalism', Orbis, 40, 1, Winter 1996, p. 127, text and n. 16; Moody also points out that the dual circuit distorts the measurement of monetary aggregates (p. 124). See also Ickes & Ryterman, 'Interenterprise Arrears', p. 344, n. 38. Lev Makarevich wrote in late 1996 that 'the legal ruble remains a fiction; it is absolutely useless as a unit of value, as the "commodity of all commodities" '; Finansovye izvestiya, 31 October 1996, p. IV.
59. Izvestiya, 9 January 1997, p. 4.
60. Ickes & Ryterman first drew attention to this aspect of the problem in 1992; 'Interenterprise Arrears', pp. 356-359.
61. Izvestiya, 24 August 1996, p. 2; Kommersant" Daily, 23 August 1996, p. 3.
62. Izvestiya, 24 August 1996, p. 2; Kommersant" Daily, 23 August 1996, p. 3.
63. For the text of the decree, see SZRF, 1996, 35 (26 August), st. 4147; for comment, see Nezavisimaya gazeta, 10 September 1996, p. 1; and Kommersant" Daily, 29 August 1996, p. 1.
64. For the text of the decree, see SZRF, 1996, 35 (26 August), st. 4147; for comment, see Nezavisimaya gazeta, 10 September 1996, p. 1; and Kommersant" Daily, 29 August 1996, p. 1.
65. For the text of the decree, see SZRF, 1996, 35 (26 August), st. 4147; for comment, see Nezavisimaya gazeta, 10 September 1996, p. 1; and Kommersant" Daily, 29 August 1996, p. 1.
66. SZRF, 1996, 37 (9 September), st. 4263.
67. See article 23-3 of the civil code for a definition of the differences in legal status between the ordinary citizen and the unincorporated citizen-entrepreneur.
68. Izvestiya, 24 August 1996, p. 2; see also Khazin's remarks as reported in Kommersant" Daily, 23 August 1996, p. 3. The presidential press service stated that the decree aimed 'at combatting the unreported conversion of bank account funds into cash'; Interfaks, 27 August 1996. Deputy Finance Minister Oleg V'yugin gave a similar explanation of the decree; Interfaks-AiF, 1996, 36 (2-8 September), pp. 4-5.
69. Izvestiya, 24 August 1996, p. 2; see also Khazin's remarks as reported in Kommersant" Daily, 23 August 1996, p. 3. The presidential press service stated that the decree aimed 'at combatting the unreported conversion of bank account funds into cash'; Interfaks, 27 August 1996. Deputy Finance Minister Oleg V'yugin gave a similar explanation of the decree; Interfaks-AiF, 1996, 36 (2-8 September), pp. 4-5.
70. Izvestiya, 24 August 1996, p. 2; see also Khazin's remarks as reported in Kommersant" Daily, 23 August 1996, p. 3. The presidential press service stated that the decree aimed 'at combatting the unreported conversion of bank account funds into cash'; Interfaks, 27 August 1996. Deputy Finance Minister Oleg V'yugin gave a similar explanation of the decree; Interfaks-AiF, 1996, 36 (2-8 September), pp. 4-5.
71. Izvestiya, 24 August 1996, p. 2; see also Khazin's remarks as reported in Kommersant" Daily, 23 August 1996, p. 3. The presidential press service stated that the decree aimed 'at combatting the unreported conversion of bank account funds into cash'; Interfaks, 27 August 1996. Deputy Finance Minister Oleg V'yugin gave a similar explanation of the decree; Interfaks-AiF, 1996, 36 (2-8 September), pp. 4-5.
72. Izvestiva, 9 January 1997, p. 4. As noted above, if enterprises are paying a commission simply to turn bank money into cash, there is a problem with the notion that the ruble is money at all.
73. For an excellent discussion of the complexities of Russia's tax system and of the difficulty of not falling into arrears of some sort, see Alexander Morozov, 'Tax Administration in Russia', East European Constitutional Review, Spring/Summer 1996, pp. 43-47.
74. SZRF, 1996, 35 (26 August), st. 4144.
75. Segodnya, 14 August 1996, p. 1; Rossiiskaya gazeta, 24 August 1996, p. 2.
76. Segodnya, 14 August 1996, p. 1; Rossiiskaya gazeta, 24 August 1996, p. 2.
77. Izvestiya, 2 April 1996, p. 2; Respublika Sakha, 21 January 1997.
78. Izvestiya, 2 April 1996, p. 2; Respublika Sakha, 21 January 1997.
79. Izvestiya, 9 January 1997, p. 4.
80. Rossiisskaya gazeta, 29 October 1994, p. 2.
81. BNA, 1994, 12, p. 22; SZRF, 1994, 5 (30 May), st. 396.
82. BNA, 1994, 12, p. 22; SZRF, 1994, 5 (30 May), st. 396.
83. Ickes & Ryterman, 'Interenterprise Arrears', p. 357.
84. Sberbank does have private shareholders, but the state retains a majority stake.
85. Interfaks, 28 May 1997.
86. Reuters, 28 April 1997.
87. For data on the rise, see Finansovye izvestiya, 3 June 1997, p. III. See also Maksim Akimov, 'Sberbank obrek sebya na bessmertie', Kommersant", 1996, 2 (30 January), pp. 44-49. The bank announced in 1995 that it intended to reduce its credit operations and concentrate on state securities and equities. Interfaks, 6 September 1995.
88. For data on the rise, see Finansovye izvestiya, 3 June 1997, p. III. See also Maksim Akimov, 'Sberbank obrek sebya na bessmertie', Kommersant", 1996, 2 (30 January), pp. 44-49. The bank announced in 1995 that it intended to reduce its credit operations and concentrate on state securities and equities. Interfaks, 6 September 1995.
89. For data on the rise, see Finansovye izvestiya, 3 June 1997, p. III. See also Maksim Akimov, 'Sberbank obrek sebya na bessmertie', Kommersant", 1996, 2 (30 January), pp. 44-49. The bank announced in 1995 that it intended to reduce its credit operations and concentrate on state securities and equities. Interfaks, 6 September 1995.
90. Both corporate and private deposits are very low as a share of GDP. In early 1995 household ruble deposits amounted to 2.7% of GDP, compared with 28.3% in Hungary and 55.2% in Germany; the corresponding figures for corporate deposits were 4.4, 16.7 and 19.4% respectively. Prill, pp. 116, 125. Household deposits grew substantially in 1996, as did the Sberbank share of such deposits. EZh, 1996, 50 (December), p. 5.
91. Finansovye izvestiya, 26 November 1996, p. II.
92. The Russian term normally translated as current account - raschetnyi schet - literally means 'transaction' account. A 'current' or 'flow' (tekushchii) account is generally used for collections and escrow account operations.
93. Prill, p. 102, text and n. 331.
94. Russian Economic Trends (hereafter RET), 5, 2, 1996, p. 125.
95. SZRF, 1994, 5 (30 May), st. 396, and 1995, 13 (27 March), st. 1122. Izvestiya, 9 January 1997, p. 4. Detailed instructions on enforcing the one-account restriction and an explanation of the conditions under which enterprises could open other types of accounts appeared in BNA, 1994, 12, p. 16, and 1995, 3, pp. 54-55. It is still the case that funds placed into other accounts should, as a rule, be deposited in a current account first; BNA, 1995, 9, p. 43.
96. SZRF, 1994, 5 (30 May), st. 396, and 1995, 13 (27 March), st. 1122. Izvestiya, 9 January 1997, p. 4. Detailed instructions on enforcing the one-account restriction and an explanation of the conditions under which enterprises could open other types of accounts appeared in BNA, 1994, 12, p. 16, and 1995, 3, pp. 54-55. It is still the case that funds placed into other accounts should, as a rule, be deposited in a current account first; BNA, 1995, 9, p. 43.
97. SZRF, 1994, 5 (30 May), st. 396, and 1995, 13 (27 March), st. 1122. Izvestiya, 9 January 1997, p. 4. Detailed instructions on enforcing the one-account restriction and an explanation of the conditions under which enterprises could open other types of accounts appeared in BNA, 1994, 12, p. 16, and 1995, 3, pp. 54-55. It is still the case that funds placed into other accounts should, as a rule, be deposited in a current account first; BNA, 1995, 9, p. 43.
98. SZRF, 1994, 5 (30 May), st. 396, and 1995, 13 (27 March), st. 1122. Izvestiya, 9 January 1997, p. 4. Detailed instructions on enforcing the one-account restriction and an explanation of the conditions under which enterprises could open other types of accounts appeared in BNA, 1994, 12, p. 16, and 1995, 3, pp. 54-55. It is still the case that funds placed into other accounts should, as a rule, be deposited in a current account first; BNA, 1995, 9, p. 43.
99. SZRF, 1994, 5 (30 May), st. 396, and 1995, 13 (27 March), st. 1122. Izvestiya, 9 January 1997, p. 4. Detailed instructions on enforcing the one-account restriction and an explanation of the conditions under which enterprises could open other types of accounts appeared in BNA, 1994, 12, p. 16, and 1995, 3, pp. 54-55. It is still the case that funds placed into other accounts should, as a rule, be deposited in a current account first; BNA, 1995, 9, p. 43.
100. SZRF, 1994, 5 (30 May), st. 396, and 1995, 13 (27 March), st. 1122. Izvestiya, 9 January 1997, p. 4. Detailed instructions on enforcing the one-account restriction and an explanation of the conditions under which enterprises could open other types of accounts appeared in BNA, 1994, 12, p. 16, and 1995, 3, pp. 54-55. It is still the case that funds placed into other accounts should, as a rule, be deposited in a current account first; BNA, 1995, 9, p. 43.
101. Izvestiya, 9 January 1997, p. 4.
102. Thomas Sigel, 'Russian Banking: Chaos in Transition', Transition, 15 March 1995, p. 41.
103. The average Russian commercial bank was estimated to have only 2.49 branches in 1996; this estimate excludes Sberbank. ITAR-TASS, 25 November 1996.
104. SZRF, 1995, 13 (27 March), st. 1122; 1996, 6 (5 February), st. 492.
105. SZRF, 1995, 13 (27 March), st. 1122; 1996, 6 (5 February), st. 492.
106. For the text of the decree, see SZRF, 1996, 35 (26 August), st. 4144. For commentary, see EZh, 1996, 42 (October), p. 27; see also the instructions of the finance ministry on the implementation of the decree in ibid., p. 19; and the TsBR instructions pertaining to it, together with accompanying commentary, in EZh, 1996, 49 (December), p. 20.
107. For the text of the decree, see SZRF, 1996, 35 (26 August), st. 4144. For commentary, see EZh, 1996, 42 (October), p. 27; see also the instructions of the finance ministry on the implementation of the decree in ibid., p. 19; and the TsBR instructions pertaining to it, together with accompanying commentary, in EZh, 1996, 49 (December), p. 20.
108. For the text of the decree, see SZRF, 1996, 35 (26 August), st. 4144. For commentary, see EZh, 1996, 42 (October), p. 27; see also the instructions of the finance ministry on the implementation of the decree in ibid., p. 19; and the TsBR instructions pertaining to it, together with accompanying commentary, in EZh, 1996, 49 (December), p. 20.
109. For the text of the decree, see SZRF, 1996, 35 (26 August), st. 4144. For commentary, see EZh, 1996, 42 (October), p. 27; see also the instructions of the finance ministry on the implementation of the decree in ibid., p. 19; and the TsBR instructions pertaining to it, together with accompanying commentary, in EZh, 1996, 49 (December), p. 20.
110. Kommersant" Daily, 28 August 1996.
111. SZRF, 1996, 35 (26 August), st. 4144, points 1-4; for details on implementation, see the joint instructions issued by the GNS, the finance ministry and the TsBR in October-November 1996, which appeared, with commentary, in EZh, 1996, 40 (October), p. 25; 1996, 47 (November), p. 25; 1996, 49 (December), p. 20, and 1996, 50 (December), p. 28.
112. SZRF, 1996, 35 (26 August), st. 4144, points 1-4; for details on implementation, see the joint instructions issued by the GNS, the finance ministry and the TsBR in October-November 1996, which appeared, with commentary, in EZh, 1996, 40 (October), p. 25; 1996, 47 (November), p. 25; 1996, 49 (December), p. 20, and 1996, 50 (December), p. 28.
113. SZRF, 1996, 35 (26 August), st. 4144, points 1-4; for details on implementation, see the joint instructions issued by the GNS, the finance ministry and the TsBR in October-November 1996, which appeared, with commentary, in EZh, 1996, 40 (October), p. 25; 1996, 47 (November), p. 25; 1996, 49 (December), p. 20, and 1996, 50 (December), p. 28.
114. SZRF, 1996, 35 (26 August), st. 4144, points 1-4; for details on implementation, see the joint instructions issued by the GNS, the finance ministry and the TsBR in October-November 1996, which appeared, with commentary, in EZh, 1996, 40 (October), p. 25; 1996, 47 (November), p. 25; 1996, 49 (December), p. 20, and 1996, 50 (December), p. 28.
115. SZRF, 1996, 35 (26 August), st. 4144, points 1-4; for details on implementation, see the joint instructions issued by the GNS, the finance ministry and the TsBR in October-November 1996, which appeared, with commentary, in EZh, 1996, 40 (October), p. 25; 1996, 47 (November), p. 25; 1996, 49 (December), p. 20, and 1996, 50 (December), p. 28.
116. See, for example, SZRF, 1995, 23 (October), st. 4071.
117. SZRF, 1996, 35 (26 August), st. 4144, point 5.
118. BNA, 1994, 12, p. 17; SZRF, 1996, 35 (26 August), st. 4144.
119. BNA, 1994, 12, p. 17; SZRF, 1996, 35 (26 August), st. 4144.
120. BNA, 1994, 12, p. 17.
121. SZRF, 1996, 35 (26 August), st. 4144.
122. EZh, 1996, 46 (November), p. 15.
123. Finansovye izvestiya, 24 April 1997, p. III; Segodnya, 14 March 1997; and Kommersant" daily, 27 February 1997.
124. Finansovye izvestiya, 24 April 1997, p. III; Segodnya, 14 March 1997; and Kommersant" daily, 27 February 1997.
125. Finansovye izvestiya, 24 April 1997, p. III; Segodnya, 14 March 1997; and Kommersant" daily, 27 February 1997.
126. Pis'mo Gosudarstvennoi Nalogovoi Sluzhby Rossiiskoi Federatsii No. BK-6-12 ot 25 oktyabrya 1996 g.
127. Izvestiya, 21 August 1996, p. 2; Finansovye izvestiya, 10 October 1996, p. I; Segodnya, 11 November 1996, p. 3; Vitryansky, p. 4; and Segodnya, 23 December 1996, p. 1. Ironically, President Elt'sin and the Duma both supported the changes in the civil code, which were opposed by the TsBR and the government.
128. Izvestiya, 21 August 1996, p. 2; Finansovye izvestiya, 10 October 1996, p. I; Segodnya, 11 November 1996, p. 3; Vitryansky, p. 4; and Segodnya, 23 December 1996, p. 1. Ironically, President Elt'sin and the Duma both supported the changes in the civil code, which were opposed by the TsBR and the government.
129. Izvestiya, 21 August 1996, p. 2; Finansovye izvestiya, 10 October 1996, p. I; Segodnya, 11 November 1996, p. 3; Vitryansky, p. 4; and Segodnya, 23 December 1996, p. 1. Ironically, President Elt'sin and the Duma both supported the changes in the civil code, which were opposed by the TsBR and the government.
130. Izvestiya, 21 August 1996, p. 2; Finansovye izvestiya, 10 October 1996, p. I; Segodnya, 11 November 1996, p. 3; Vitryansky, p. 4; and Segodnya, 23 December 1996, p. 1. Ironically, President Elt'sin and the Duma both supported the changes in the civil code, which were opposed by the TsBR and the government.
131. Izvestiya, 21 August 1996, p. 2; Finansovye izvestiya, 10 October 1996, p. I; Segodnya, 11 November 1996, p. 3; Vitryansky, p. 4; and Segodnya, 23 December 1996, p. 1. Ironically, President Elt'sin and the Duma both supported the changes in the civil code, which were opposed by the TsBR and the government.
132. For a detailed discussion of civil code article 313 and the court cases involving it, see A. O. Tyndik, 'K voprosu o poryadke pogasheniya bankovskikh ssud', Biznes i banki, 1997, 5 (January), pp, 1-2.
133. 'O vvedenii v deistvie chasti vtoroi Grazhdanskogo kodeksa Rossiiskoi Federatsii', Federal'nyi zakon ot 24.01.96 No. 14-F3, EZh, 1996 (February), p. 21.
134. L. Novoselova, 'Spisanie sredstv s bankovskogo scheta', EZh, 1996, 48 (November), p. 32.
135. Art. 13 of the 27 December 1991 law Ob osnovakh nalogovoi sistemy v Rossiiskoi Federatsii', Vedomosti, 1992, 11 (12 March), st 527. A number of presidential and government decrees have extended this power: see, for example, Vedomosti, 1992, 9 (27 February), st. 391; BNA, 1994, 10, pp. 15-23; BNA, 1994, 12, pp. 18-20; and SZRF, 1994, 5 (30 May), st. 396.
136. Art. 13 of the 27 December 1991 law Ob osnovakh nalogovoi sistemy v Rossiiskoi Federatsii', Vedomosti, 1992, 11 (12 March), st 527. A number of presidential and government decrees have extended this power: see, for example, Vedomosti, 1992, 9 (27 February), st. 391; BNA, 1994, 10, pp. 15-23; BNA, 1994, 12, pp. 18-20; and SZRF, 1994, 5 (30 May), st. 396.
137. Art. 13 of the 27 December 1991 law Ob osnovakh nalogovoi sistemy v Rossiiskoi Federatsii', Vedomosti, 1992, 11 (12 March), st 527. A number of presidential and government decrees have extended this power: see, for example, Vedomosti, 1992, 9 (27 February), st. 391; BNA, 1994, 10, pp. 15-23; BNA, 1994, 12, pp. 18-20; and SZRF, 1994, 5 (30 May), st. 396.
138. Art. 13 of the 27 December 1991 law Ob osnovakh nalogovoi sistemy v Rossiiskoi Federatsii', Vedomosti, 1992, 11 (12 March), st 527. A number of presidential and government decrees have extended this power: see, for example, Vedomosti, 1992, 9 (27 February), st. 391; BNA, 1994, 10, pp. 15-23; BNA, 1994, 12, pp. 18-20; and SZRF, 1994, 5 (30 May), st. 396.
139. Art. 13 of the 27 December 1991 law Ob osnovakh nalogovoi sistemy v Rossiiskoi Federatsii', Vedomosti, 1992, 11 (12 March), st 527. A number of presidential and government decrees have extended this power: see, for example, Vedomosti, 1992, 9 (27 February), st. 391; BNA, 1994, 10, pp. 15-23; BNA, 1994, 12, pp. 18-20; and SZRF, 1994, 5 (30 May), st. 396.
140. Tamozhennyi Kodeks Rossiiskoi Federatsii, st. 24.
141. Vedomosti, 1991, 18 (2 May), st. 565.
142. For a comprehensive listing of the relevant legislation, see Novoselova, p. 32.
143. Informatsionnoe pis'mo Vyshego arbitrazhnogo suda RF ot I oktyabrya 1996 g. No. 8 'O nekotorykh voprosakh spisaniya sredstv, nakhodyashchikhsya na schete, bez rasporyazheniya klienta'; Novoselova, p. 32.
144. As will be seen below, 1 am deliberately taking off Peter Rutland's well-coined phrase. See Peter Rutland, The Myth of the Plan: Lessons of Soviet Planning Experience (LaSalle, Open Court, 1985).
145. Interfaks AiF, 1996, 36 (2-8 September), pp. 1, 5.
146. The foregoing discussion has omitted altogether official regulation of the holding and conversion of foreign exchange; for a brief discussion, see Prill, pp. 103-104.
147. This is a major reason for the considerable difference between cash-flow and commitment measures of budgetary spending, which has significant implications for the accumulation of government debt.
148. T. H. Rigby, 'A Conceptual Approach to Authority, Power and Policy in the Soviet Union', in T. H. Rigby, Archie Brown & Peter Reddaway (eds), Authority, Power and Policy in the USSR: Essays Dedicated to Leonard Schapiro (Basingstoke, Macmillan, 1980), p. 17.
149. For a recent Russian discussion of this dilemma, see Mark Rats in Nezavisimaya gazeta, 17 December 1996, p. 2.
150. On various schemes for allowing the tax police to keep a proportion (from 10% to 50%) of taxes recovered and fines collected, see BBC Summary of World Broadcasts, SU/1996 (13 May 1996) C/3; and Morozov, p. 44. Morozov indicates that the practice was discontinued in 1995, but in June 1996, facing massive revenue shortfalls, the authorities announced that the Tax Police would keep 50% of any taxes they recovered to the end of the year; Segodnya, 28 June 1996.
151. On various schemes for allowing the tax police to keep a proportion (from 10% to 50%) of taxes recovered and fines collected, see BBC Summary of World Broadcasts, SU/1996 (13 May 1996) C/3; and Morozov, p. 44. Morozov indicates that the practice was discontinued in 1995, but in June 1996, facing massive revenue shortfalls, the authorities announced that the Tax Police would keep 50% of any taxes they recovered to the end of the year; Segodnya, 28 June 1996.
152. On various schemes for allowing the tax police to keep a proportion (from 10% to 50%) of taxes recovered and fines collected, see BBC Summary of World Broadcasts, SU/1996 (13 May 1996) C/3; and Morozov, p. 44. Morozov indicates that the practice was discontinued in 1995, but in June 1996, facing massive revenue shortfalls, the authorities announced that the Tax Police would keep 50% of any taxes they recovered to the end of the year; Segodnya, 28 June 1996.
153. Finansovye izvestiya, 20 February 1997, p. I, and 6 March 1997, p. I; and AFI, 28 February 1997.
154. Finansovye izvestiya, 20 February 1997, p. I, and 6 March 1997, p. I; and AFI, 28 February 1997.
155. This is the view taken by Koshkareva & Narzikulov; Nezavisimaya gazeta, 18 July 1996, p. 4. For a Western view, see Joel Hellman, 'Russia Adjusts to Stability', Transition, 17 May 1996, pp. 6-10.
156. This is the view taken by Koshkareva & Narzikulov; Nezavisimaya gazeta, 18 July 1996, p. 4. For a Western view, see Joel Hellman, 'Russia Adjusts to Stability', Transition, 17 May 1996, pp. 6-10.
157. Finansovye izvestiya, 26 November 1996, pp. II-III.
158. Reuters, 18 January 1995.
159. The most important channels for directed credits have been former spetsbanki such as Promstroibank, and other 'branch banks' created on the basis of former branch ministries and departments, Reuters, 15 March 1994. For a discussion of the mechanics of soft-credit disbursal, see Prill, pp. 142-147 and 170-171. For an excellent analysis of the politics of soft credit distribution, see Daniel Treisman, 'The Politics of Soft Credit in Post-Soviet Russia', Europe-Asia Studies, 47, 6, 1995, pp. 949-976.
160. The most important channels for directed credits have been former spetsbanki such as Promstroibank, and other 'branch banks' created on the basis of former branch ministries and departments, Reuters, 15 March 1994. For a discussion of the mechanics of soft-credit disbursal, see Prill, pp. 142-147 and 170-171. For an excellent analysis of the politics of soft credit distribution, see Daniel Treisman, 'The Politics of Soft Credit in Post-Soviet Russia', Europe-Asia Studies, 47, 6, 1995, pp. 949-976.
161. The most important channels for directed credits have been former spetsbanki such as Promstroibank, and other 'branch banks' created on the basis of former branch ministries and departments, Reuters, 15 March 1994. For a discussion of the mechanics of soft-credit disbursal, see Prill, pp. 142-147 and 170-171. For an excellent analysis of the politics of soft credit distribution, see Daniel Treisman, 'The Politics of Soft Credit in Post-Soviet Russia', Europe-Asia Studies, 47, 6, 1995, pp. 949-976.
162. Yakov Dubenetsky, 'Glavnoe - delat' svoe delo', EZh, 1996, 49 (December), p. 5.
163. Aleksei Golubovich, The Banker's Almanac Reports: 11 - Russia (East Grinstead, 1995), p. 64.
164. IBRD, Russia: The Banking System in Transition (Washington, IBRD, 1993), p. 21.
165. Liam Halligan et al., 'Subsidization of the Russian Economy', RET, 5, 1, 1996, p. 111.
166. Segodnya, 14 May 1994, p. 3.
167. Halligan et al., pp. 111, 114-115.
168. Golubovich, p. 7.
169. See IBRD, Russian Economic Reform: Crossing the Threshold of Structural Change (Washington: IBRD, 1992), p. 109.
170. Reuters, 17 May 1994.
171. Prill, p. 143.
172. Agroprombank lost 140 billion rubles in the first three quarters of 1996, mainly because soft credits channelled through it were not being repaid; as early as April it was asking the government to re-nationalise it. Reuters, 27 November 1996.
173. Finansovye izvestiya, 31 October 1996, p. IV; Reuters, 18 January 1995; Prill, p. 170.
174. Finansovye izvestiya, 31 October 1996, p. IV; Reuters, 18 January 1995; Prill, p. 170.
175. Finansovye izvestiya, 31 October 1996, p. IV; Reuters, 18 January 1995; Prill, p. 170.
176. Prill, pp. 35-36.
177. Dubenetsky, p. 5.
178. IBRD, Banking System, pp. 18, 20.
179. Izvestiya, 1 July 1995, p. 1; and author's conversation with Dmitrii Murzin and Evgenii Vasil'chuk, editor-in-chief and economic commentator, respectively, of Finansovye izvestiya, Moscow, July 1995.
180. Izvestiya, 1 July 1995, p. 1; and author's conversation with Dmitrii Murzin and Evgenii Vasil'chuk, editor-in-chief and economic commentator, respectively, of Finansovye izvestiya, Moscow, July 1995.
181. Segodnya, 11 November 1996, p. 3; Finansovye izvestiya, 23 January 1997, p. III.
182. Segodnya, 11 November 1996, p. 3; Finansovye izvestiya, 23 January 1997, p. III.
183. Kommersant" Daily, 5 February 1997.
184. Interfaks, 28 August 1996; L. Nazarova, "Rossiya' predlagaet gosudarstvu otregulirovat' prioritety', EZh, 43 (October), p. 4; Aleksandr Murychev, 'Deklaratsiyami syt ne budesh", EZh, 5 (February), p. 4.
185. Interfaks, 28 August 1996; L. Nazarova, "Rossiya' predlagaet gosudarstvu otregulirovat' prioritety', EZh, 43 (October), p. 4; Aleksandr Murychev, 'Deklaratsiyami syt ne budesh", EZh, 5 (February), p. 4.
186. Interfaks, 28 August 1996; L. Nazarova, "Rossiya' predlagaet gosudarstvu otregulirovat' prioritety', EZh, 43 (October), p. 4; Aleksandr Murychev, 'Deklaratsiyami syt ne budesh", EZh, 5 (February), p. 4.
187. Finansovye izvestiya, 3 December 1996, p. III; EZh, 1996, 49 (December), p. 4. Other lobby groups have adopted a similar line; see EZh, 1997, 2 (January), p. 4.
188. Finansovye izvestiya, 3 December 1996, p. III; EZh, 1996, 49 (December), p. 4. Other lobby groups have adopted a similar line; see EZh, 1997, 2 (January), p. 4.
189. Finansovye izvestiya, 3 December 1996, p. III; EZh, 1996, 49 (December), p. 4. Other lobby groups have adopted a similar line; see EZh, 1997, 2 (January), p. 4.
190. EZh, 1996, 50 (December), p. 4; Kommersant" Daily, 27 December 1996. The proposal is somewhat ironic, in that NRB previously had little contact with the real economy, focusing on external debt and government securities.
191. EZh, 1996, 50 (December), p. 4; Kommersant" Daily, 27 December 1996. The proposal is somewhat ironic, in that NRB previously had little contact with the real economy, focusing on external debt and government securities.
192. Finansovye izvestiya, 29 May 1997, p. III.
193. Kommersant" Daily, 27 December 1996.
194. Ya. N. Dubenetsky, 'Banki gotovy vkladyvat' den'gi v Rossiiskuyu ekonomiku, no...', Biznes i banki, 1996, 43 (October), p. 2.
195. About the time of the tender, the Agriculture Minister, Viktor Khlystun, outlined plans for state aid to agriculture over 1997-2000 which did not imply any substantial reduction in state support; Interfaks, 17 November 1996; for coverage of the tender, see Izvestiya, 26 November 1996, p. 1; Segodnya, 13 November 1996, p. 1; and RIA-Novosti, 13 November 1996 and 25 November 1996.
196. About the time of the tender, the Agriculture Minister, Viktor Khlystun, outlined plans for state aid to agriculture over 1997-2000 which did not imply any substantial reduction in state support; Interfaks, 17 November 1996; for coverage of the tender, see Izvestiya, 26 November 1996, p. 1; Segodnya, 13 November 1996, p. 1; and RIA-Novosti, 13 November 1996 and 25 November 1996.
197. About the time of the tender, the Agriculture Minister, Viktor Khlystun, outlined plans for state aid to agriculture over 1997-2000 which did not imply any substantial reduction in state support; Interfaks, 17 November 1996; for coverage of the tender, see Izvestiya, 26 November 1996, p. 1; Segodnya, 13 November 1996, p. 1; and RIA-Novosti, 13 November 1996 and 25 November 1996.
198. About the time of the tender, the Agriculture Minister, Viktor Khlystun, outlined plans for state aid to agriculture over 1997-2000 which did not imply any substantial reduction in state support; Interfaks, 17 November 1996; for coverage of the tender, see Izvestiya, 26 November 1996, p. 1; Segodnya, 13 November 1996, p. 1; and RIA-Novosti, 13 November 1996 and 25 November 1996.
199. RIA-Novosti, 20 January 1997. There are three tiers to the system of federal upolnomochennye banki, with different capital requirements and permitted activities for each. RIA-Novosti, 15 January 1997.
200. RIA-Novosti, 20 January 1997. There are three tiers to the system of federal upolnomochennye banki, with different capital requirements and permitted activities for each. RIA-Novosti, 15 January 1997.
201. SZRF, 1997, 20 (19 May), st. 2235; ITAR-TASS, 13 May 1997; and Finansovye izvestiya, 13 May 1997, p. I.
202. SZRF, 1997, 20 (19 May), st. 2235; ITAR-TASS, 13 May 1997; and Finansovye izvestiya, 13 May 1997, p. I.
203. SZRF, 1997, 20 (19 May), st. 2235; ITAR-TASS, 13 May 1997; and Finansovye izvestiya, 13 May 1997, p. I.
204. Finansovye izvestiya, 31 October 1996, p. III.
205. Izvestiya, 17 January 1997, p. 1.
206. Finansovye izvestiya, 12 November 1996, p. III.
207. RET, 6, 1, 1997, p. 147. It may be argued that not all overdue loans are bad, but this must be set against the fact that overdue principal and interest are routinely understated in order to make banks' balance sheets look healthier.
208. Finansovye izvestiya, 29 May 1997, p. III.
209. RET, 5, 3, 1996, p. 19.
210. Kommersant" Daily, 16 July 1996, pp. 5-6.
211. Kommersant" Daily, 5 February 1997.
212. Finansovye izvestiya, 29 May 1997, p. II; Interfaks, 27 May 1997; Moscow Times, 6 June 1997; Segodnya, 14 May 1997.
213. Finansovye izvestiya, 29 May 1997, p. II; Interfaks, 27 May 1997; Moscow Times, 6 June 1997; Segodnya, 14 May 1997.
214. Finansovye izvestiya, 29 May 1997, p. II; Interfaks, 27 May 1997; Moscow Times, 6 June 1997; Segodnya, 14 May 1997.
215. Finansovye izvestiya, 29 May 1997, p. II; Interfaks, 27 May 1997; Moscow Times, 6 June 1997; Segodnya, 14 May 1997.
216. Finansovye izvestiya, 29 May 1997, p. II.
217. SZRF, 1997, 20 (19 May), st. 2233.
218. See Hellman, pp. 6-10; also Finansovye izvestiya, 26 November 1996, pp. II-III; and EZh, 1997, 2 (January), p. 3.
219. See Hellman, pp. 6-10; also Finansovye izvestiya, 26 November 1996, pp. II-III; and EZh, 1997, 2 (January), p. 3.
220. See Hellman, pp. 6-10; also Finansovye izvestiya, 26 November 1996, pp. II-III; and EZh, 1997, 2 (January), p. 3.
221. Kommersant" Daily, 16 July 1996, pp. 5-6; Kommersant", 1996, 42 (12 November), pp. 66-69.
222. Kommersant" Daily, 16 July 1996, pp. 5-6; Kommersant", 1996, 42 (12 November), pp. 66-69.
223. Halligan et al, pp. 109-115.
224. This was a one of the causes of the August 1995 crisis on the inter-bank market; RET, 4, 2, 1995, p. 24; and 4, 3, 1995, p. 25.
225. This was a one of the causes of the August 1995 crisis on the inter-bank market; RET, 4, 2, 1995, p. 24; and 4, 3, 1995, p. 25.
226. Delovoi mir, 21 January 1997, p. 4; EZh, 1996, 52 (December), p. 5. GKO yields, which had reached 180% prior to the presidential election (despite inflation well below 50% per annum), were down to about 40% by the end of 1996 (Interfaks-AiF, 1 January 1997).
227. Delovoi mir, 21 January 1997, p. 4; EZh, 1996, 52 (December), p. 5. GKO yields, which had reached 180% prior to the presidential election (despite inflation well below 50% per annum), were down to about 40% by the end of 1996 (Interfaks-AiF, 1 January 1997).
228. Delovoi mir, 21 January 1997, p. 4; EZh, 1996, 52 (December), p. 5. GKO yields, which had reached 180% prior to the presidential election (despite inflation well below 50% per annum), were down to about 40% by the end of 1996 (Interfaks-AiF, 1 January 1997).
229. The TsBR withdrew 237 licences in January-October 1996 - 11% of the sector's banks, which accounted for 4% of total assets; Finansovye izvestiya, 12 November 1996, p. III. This compares with 290 withdrawals in the period 1992-95 inclusive; RET, 5, 2, 1996, p. 124.
230. The TsBR withdrew 237 licences in January-October 1996 - 11% of the sector's banks, which accounted for 4% of total assets; Finansovye izvestiya, 12 November 1996, p. III. This compares with 290 withdrawals in the period 1992-95 inclusive; RET, 5, 2, 1996, p. 124.
231. Rossiiskaya gazeta, 9 January 1997.
232. Hellman, pp. 6, 9.
233. Interfaks, 17 November 1996.
234. Although it was estimated that over 50% of Moscow banks could not fulfil their obligations during the August crisis, the TsBR focused its activities on shoring up the positions of a small number of large banks.
235. Kommersant", 1996, 23-24 (1 July), pp. 20-21; Izvestiya, 31 July 1996, p. 2; Nezavisimaya gazeta, 10 July 1996, pp. 1-2, and 18 July 1996, pp. 1, 4.
236. Kommersant", 1996, 23-24 (1 July), pp. 20-21; Izvestiya, 31 July 1996, p. 2; Nezavisimaya gazeta, 10 July 1996, pp. 1-2, and 18 July 1996, pp. 1, 4.
237. Kommersant", 1996, 23-24 (1 July), pp. 20-21; Izvestiya, 31 July 1996, p. 2; Nezavisimaya gazeta, 10 July 1996, pp. 1-2, and 18 July 1996, pp. 1, 4.
238. Natalia Gurushina, 'Central Bank Struggles to Stabilise the Russian Banking System', OMRI Analytical Briefs, 1, 157 (10 June 1996), p. 1.
239. Finansovye izvestiya, 23 January 1997, p. I.
240. Reuters, 4 April 1996.
241. SZRF, 1996, 30 (22 July), st. 3607.
242. For details of the bill, see Izvestiya, 12 September 1996, p. 2.
243. Finansovye izvestiya, 21 January 1997, pp. I, III; Krest'yanskaya Rossiya, 30 December 1996.
244. Finansovye izvestiya, 21 January 1997, pp. I, III; Krest'yanskaya Rossiya, 30 December 1996.
245. Shelagh Heffernan, Modern Banking in Theory and Practice (London, John Wiley and Sons, 1996), ch. 1. It should, however, be noted that, in the Russian case, gaps in legislation meant that until relatively recently any financial firm had to register as a bank; Kommersant" Daily, 16 July 1996, p. 5.
246. Shelagh Heffernan, Modern Banking in Theory and Practice (London, John Wiley and Sons, 1996), ch. 1. It should, however, be noted that, in the Russian case, gaps in legislation meant that until relatively recently any financial firm had to register as a bank; Kommersant" Daily, 16 July 1996, p. 5.
247. Finansovye izvestiya, 26 November 1996, p. II. There appears to have been a slow decline in the share of long-term credits. In June 1996 7.2% of credits to households and non-bank enterprises was long-term (RET, 5, 2, 1996, p. 125); the August figure was 6.5% (Finansovye izvestiya, 31 October 1996, p. IV) and the September figure 6.24%.
248. Finansovye izvestiya, 26 November 1996, p. II. There appears to have been a slow decline in the share of long-term credits. In June 1996 7.2% of credits to households and non-bank enterprises was long-term (RET, 5, 2, 1996, p. 125); the August figure was 6.5% (Finansovye izvestiya, 31 October 1996, p. IV) and the September figure 6.24%.
249. Finansovye izvestiya, 26 November 1996, p. II. There appears to have been
250. The reasons for this behaviour are still not well understood. For a discussion of the phenomenon, see Brigitte Granville, The Success of Russian Economic Reforms (London, RIIA, 1995), pp. 32-33, 40-42.
251. A. Morozov, 'Inflyatsionnyi dokhod snizilsya, chto dal'she?', EZh, 1997, 12 (March), p. 4.
252. See for example, EZh, 2 (January), p. 4; Finansovye izvestiya, 16 March 1995; John Ryan, 'Russian Banks Reluctant to Lend Even with Central Bank Help', Bloomberg Business News, 20 February 1996; Interfaks, 28 August 1996; Nazarova, p. 4; Finansovye izvestiya, 3 December 1996, p. III; EZh, 1996, 49 (December), p. 4.
253. See for example, EZh, 2 (January), p. 4; Finansovye izvestiya, 16 March 1995; John Ryan, 'Russian Banks Reluctant to Lend Even with Central Bank Help', Bloomberg Business News, 20 February 1996; Interfaks, 28 August 1996; Nazarova, p. 4; Finansovye izvestiya, 3 December 1996, p. III; EZh, 1996, 49 (December), p. 4.
254. See for example, EZh, 2 (January), p. 4; Finansovye izvestiya, 16 March 1995; John Ryan, 'Russian Banks Reluctant to Lend Even with Central Bank Help', Bloomberg Business News, 20 February 1996; Interfaks, 28 August 1996; Nazarova, p. 4; Finansovye izvestiya, 3 December 1996, p. III; EZh, 1996, 49 (December), p. 4.
255. See for example, EZh, 2 (January), p. 4; Finansovye izvestiya, 16 March 1995; John Ryan, 'Russian Banks Reluctant to Lend Even with Central Bank Help', Bloomberg Business News, 20 February 1996; Interfaks, 28 August 1996; Nazarova, p. 4; Finansovye izvestiya, 3 December 1996, p. III; EZh, 1996, 49 (December), p. 4.
256. See for example, EZh, 2 (January), p. 4; Finansovye izvestiya, 16 March 1995; John Ryan, 'Russian Banks Reluctant to Lend Even with Central Bank Help', Bloomberg Business News, 20 February 1996; Interfaks, 28 August 1996; Nazarova, p. 4; Finansovye izvestiya, 3 December 1996, p. III; EZh, 1996, 49 (December), p. 4.
257. See for example, EZh, 2 (January), p. 4; Finansovye izvestiya, 16 March 1995; John Ryan, 'Russian Banks Reluctant to Lend Even with Central Bank Help', Bloomberg Business News, 20 February 1996; Interfaks, 28 August 1996; Nazarova, p. 4; Finansovye izvestiya, 3 December 1996, p. III; EZh, 1996, 49 (December), p. 4.
258. See for example, EZh, 2 (January), p. 4; Finansovye izvestiya, 16 March 1995; John Ryan, 'Russian Banks Reluctant to Lend Even with Central Bank Help', Bloomberg Business News, 20 February 1996; Interfaks, 28 August 1996; Nazarova, p. 4; Finansovye izvestiya, 3 December 1996, p. III; EZh, 1996, 49 (December), p. 4.
259. Banks expose themselves to serious risk if they lend long on the basis of short-term liabilities such as demand deposits.
260. Finansovye izvestiya, 26 November 1996, p. II.
261. Joseph R. Blasi et al., Kremlin Capitalism: Privatising the Russian Economy (Ithaca; Cornell University Press, 1997), p. 143.
262. In a high-inflation environment, lenders, fearing lower inflation, must charge nominal interest rates well above the rate of inflation in order to insure against higher inflation; this naturally discourages borrowers, who fear that a fall in inflation will leave them with still higher real interest rates. The whole problem is exacerbated by the fact that the higher inflation is, the more volatile it tends to be. Moreover, long-term commitment is discouraged by the fact that stabilisation is likely to bring with it sharp changes in the relative profitability of different firms and sectors (Rostowski, p. 13).
263. Prill, p. 165-166.
264. The efficient functioning of the financial system depends on the availability of good enterprise-specific financial information, but the massive chains of non-payments can render any serious assessment of an enterprise's viability impossible. Ickes & Ryterman, 'Interenterprise Arrears', pp. 333-336; idem, 'Roadblock to Economic Reform: Inter-Enterprise Debt and the Transition to Markets', Post-Soviet Affairs, 9, 3, 1993, p. 233.
265. The efficient functioning of the financial system depends on the availability of good enterprise-specific financial information, but the massive chains of non-payments can render any serious assessment of an enterprise's viability impossible. Ickes & Ryterman, 'Interenterprise Arrears', pp. 333-336; idem, 'Roadblock to Economic Reform: Inter-Enterprise Debt and the Transition to Markets', Post-Soviet Affairs, 9, 3, 1993, p. 233.
266. Khandruev, 'Kreditnaya politika i nalogovye perspektivy', p. 3.
267. Blasi et al., p. 143.
268. Kommersant Daily, 5 February 1997. The estimate is attributed to the State Tax Service.
269. Secrecy stems from a general fear of outsider control and from the worry that the tax authorities and the mafia may obtain any financial information enterprises disclose to potential lenders.
270. Finansovye izvestiya, 12 November 1996, p. VI. F. Glisin et al., 'Delovaya aktivnost' finansovo-promyshlennykh grupp Rossiiskoi Federatsii', Voprosy statistiki, 1996, 2, pp. 60-66.
271. Finansovye izvestiya, 12 November 1996, p. VI. F. Glisin et al., 'Delovaya aktivnost' finansovo-promyshlennykh grupp Rossiiskoi Federatsii', Voprosy statistiki, 1996, 2, pp. 60-66.
272. Finansovye izvestiya, 26 November 1996, p. II.
273. Ibid. See also, Prill, p. 123.
274. As longer-term lending becomes attractive, banks will need to attract more term deposits in order to avoid a mismatch in the term structures of assets and liabilities.
275. RET, 5, 2, 1996, p. 125.
276. EZh, 1997, 2 (January), p. 4.
277. Joseph Stiglitz, 'The Design of Financial Systems for the Newly Emerging Democracies of Eastern Europe', unpublished manuscript for the Institute for Policy Reform, September 1991, pp. 1 and 28; cited in Johnson, p. 979, n. 30.
278. Joseph Stiglitz, 'The Design of Financial Systems for the Newly Emerging Democracies of Eastern Europe', unpublished manuscript for the Institute for Policy Reform, September 1991, pp. 1 and 28; cited in Johnson, p. 979, n. 30.
279. Finansovye izvestiya, 16 January 1997, p. II.
280. RET, 6, 1, 1997, p. 147.
281. The top 12 banks by asset growth, however, were all based in the capital. EZh, 1996, 46 (November), pp. 4-5.
282. Prill identifies many of these attitudes on the part of managers of former spetsbanki and their spin-offs and other so-called 'managerial banks'. See Prill, pp. 35-36, 42-45.