Innovative methods of economic relations in the
banking system
Isayeva
P.G.
Russia,
Dagestan State University
The pace of
economic development, the growth of the scale and complexity of economic
processes led to a particular view of economists on the role of the state in
the modern economy as a whole and in the regulation of economic relations in
the banking system in particular.
The regulation
must precede the stage of setting goals and determining of the major landmarks,
which are planned to be achieved through regulation. The process of making
specific goals of economic development in general and the banking system in
particular must be accompanied by the analysis and monitoring of the internal
and external environment, developing of a particular strategy, assessment of
the resource availability for achieving one’s goals, monitoring of the progress
of the set goals, analysis and evaluation of the results achieved and developing
of amendments on that basis.
The essence of
government regulation of banking activity and the need for its implementation
are determined by the increasing role of banks in the economy. The banking
system has always been the subject of fairly strict regulation on the strength
of its special status and the ability to accumulate economic risks. However,
the role of the state in regulating the banking system in a market economy should
be put not so much in terms of determining the extent and scope of government
intervention in the processes in banking sphere, but in terms of identifying the
very role of the state in these processes.
In the process of
development of banking business and the accumulation of experience of banking activity
there appeared a certain range of causes determining the necessity and features
of state influence on the activity of credit institutions:
1. due to their ability
of passive money issue commercial banks have a significant impact on the money
supply in the economy and price stability. In the absence of regulatory impact
both these indicators (money supply and the price level) are exposed to
significant fluctuations and may have an impact on the economic stability of
the country and on the economic growth;
2. unstability is
inherent in the banking system. The loss of depositor confidence in banks and
lack of confidence in safety of deposits can lead to their sudden (and mass)
withdrawal. It can cause panic among depositors and a massive outflow of
deposits, which in turn can lead to the failure of one bank and the whole banking
system due to the so-called "domino effect";
3. another
argument for the necessity of banking regulation is protection of creditors and
depositors from losses. The issue here is not merely in trusting banks, in the
absence of which the depositors' money will be withdrawn from the banks. In
this regard, there should be considered the economic aspect of the relationship
of depositors and banks, because as we noted earlier banks are financial
intermediaries. There is a mutual benefit in these relations since no one depositor
has enough information and knowledge for independent (without intermediaries) and
successful investment of funds, as, for example, a bank that acts as a creditor.
Bank clients and investors face the problem of controlling the process of implementation
of the project, in which they invest their money when operating in the
situation of proper information possession and information asymmetry. The
implementation of such control allows significantly increase the efficiency of
investment. There is a special term in economics for this problem and it is a moral
hazard;
4. "The
effect of diversification and scale." Foreign economists conclude on the necessity
of banking regulation on the basis of rich, decades of experience of banking
activity and the studies and on the basis of the concept of banking efficiency.
Economists argue that bank achieves the so-called "economies of scale» (or
scale economies) when lowering average costs in the process of increasing the
size of a bank, i.e. when a bank increases its capital and from a small institution
becomes a medium or large size bank. The most optimal is a minimum efficient
scale. This will be the best size of the bank both for owners seeking to make a
maximum profit from their investment and the economy as a whole (for the most
efficient allocation of resources).
The primary
objective of government regulation of the banking economic relations in the
banking system is the creation of conditions for its sustainable development;
prevention of bankruptcy of commercial banks; creation of conditions for increase
of effectiveness of their activity in providing protection of individual
economic interests of all participants of economic relations in the banking
system and their property rights.
It should be
noted that the peculiarity of the current system of state regulation of banking
activity in Russia is largely focused on monitoring the observance of banking
laws standards than on the assessment of banking risks.
The mechanism of
state regulation of the entire system of economic relations and relations as
well as the relations in the banking system includes certain forms, methods and
instruments. Their selection and combination depend on the specific conditions
in the economy in general and in the banking system in particular (for example,
the presence or absence of the crisis, etc.). At the same time there must be maintained
a certain balance of interests of all participants of economic relations in the
banking system. For example, one of the measures for establishment of the
resource base of commercial banks is a ban on demand up to the expiry of the
contract on deposits of individuals by their owners. On the one hand, it helps
to stabilize the most important source of resources of commercial banks, and from
the other hand it violates the rights of depositors for the return of their
funds invested in bank.
Based on the
above mentioned, we can single out the establishment of effective
self-regulatory mechanism, which presuppose timely response to the effects that
are external for the banking system and that violate its normal functioning and
the establishment of effective system preventing crises in the banking system as
a priority directions of the development of state regulation of economic
relations of the domestic banking system.
References
1. Tavasiev. A.M.
The current condition of the banking sector in Russia and its quotient in general
economic process / A.M. Tavasiev / / Banking services.-2008. - № 3
2. Financial and
credit encyclopedic dictionary / Edited by Gryaznova A.G. - Moscow: Finances
and statistics, 2002. - 1165 pages. - P. 229