The Problem of Non-payment and Banking Sector Development in Russia

Abstract

During its transition to a market-based economy, Russia has experienced a severe non-payment problem. We analyze the emergence and development of arrears problem in the banking sector, putting a special emphasis upon the interrelation between the ratio of the non-performing loan and the quantitative and qualitative characteristics of each bank. We find that the banks with the origin of the former specialized banks tend to have a higher ratio of the non-performing loan, while the newly established private banks have a lower one. This shows that the banking sector in Russia has been quite segmented.