Regional Differentiation Assessment of Credit Risk for Banking Activities in Russia

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Abstract:

The Russian banking system characterized by a significant level of institutional concentration is a wide network of branches and divisions in the regions of the Russian Federation. It determines the importance of estimating the level of regional differentiation of credit risk banking activities, e. g., evaluating the risk to the stability and efficiency of the national banking system.

This article studies interregional differentiation of the credit risk of the Russian banking system, assessing its nature and depth. The statistical data of Federal State Statistics Service and Bank of Russia has served as the source of information. The research has employed the methods of systems analysis, as well as mathematical statistics and cluster analysis.

The study has revealed pronounced regional variations in the level of credit risk of the banking activities in RF regions (during the studied period) and the trend to their gain. The change in the standard deviation measure of risk over time allows to state the non-stationary nature of the magnitude of credit risk activities of Russian banks in the regions. That, in its turn, determines the necessity of considering the characteristics of the change of risk in time in the further research on the topic. Based on these factors, a typology of Russian regions was generated. These results allow us to improve the validity of decision-making in banking activity at the regional level and form tools in the field of regulation of the spatial structure of the national banking system. This, in general, should improve the efficiency and stability of the banking system in Russia.

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