Economic crises are least affected by areas with a high degree of integration and shared financial resources. In a market without internal borders, where goods, resources, capital, labor freely move, there is a favorable investment climate and more conditions for the formation of powerful producers. In such circumstances, the need for another financial structure, a regional bank, is increasing.
Destination
Regional development banks are created with the participation of the state. They have clear lines of work, complement government integration in the economic and social spheres, maintain foreign trade relations by providing loans to small and medium-sized enterprises. For example, the assistance provided by the European Investment Bank in 2010 to Hungary, Iceland, Greece, Latvia, helped to stabilize the economic and financial situation of the countries. Regional development banks make a significant contribution to the mutual growth of member countries and help to overcome the negative consequences of financial crises. In such conditions, the role of interstate financial institutions is increasing. Let us consider in more detail the stages of their cooperation.
History of development
The starting point can be called the period of economic recovery after the Second World War. In 1949, in Moscow, the leaders of Hungary, Albania, Romania, Bulgaria, Poland, the USSR and Czechoslovakia decided to create a Council for Mutual Economic Assistance (CMEA). The goal is to provide financial, scientific and technical cooperation, to facilitate the implementation of joint activities. In subsequent years, the GDR, Mongolia, Yugoslavia and Cuba joined it. By the mid-70s, CMEA maintained relations with more than thirty international institutions.
Achievements
Even at the stage of establishing relations, the organization was able to satisfy the allies' need for fuel, raw materials and machinery, and jointly implement the construction of the largest Druzhba oil pipeline, which was used to transport raw materials to Hungary, Poland and Czechoslovakia. In the second half of the 60s, Intermetall, a fleet of freight cars were created. Through the CMEA, clearing trade between countries was coordinated, economic plans were linked, and a cooperation mechanism functioned.
Hungary supplied buses to the Allies, East Germany - clothes, Poland - cosmetics, pharmacology, Czechoslovakia - electric locomotives, Cuba - sugar, Romania - furniture. These goods were exchanged for cheap oil, gas, metal, products of machine, instrument making and defense industries. After the collapse of the USSR, this structure also ceased to exist. But today, other similar institutions are functioning.
Asian Regional Development Bank
The ADB was established in 1966 by the Economic and Social Commission of Asia and the Pacific. Objectives of the organization:
- promoting economic growth in the region of Asia and the Far East;
- improving the status of women in society;
- providing labor resources of member countries.
The Regional Development and Reconstruction Bank in Asia provides:
- loans for the implementation of economic and social projects;
- technical assistance in program preparation;
- loans to public and private enterprises for development;
- Helps in coordinating plans and goals.
To date, the union has 56 member countries. The structure of the organization is represented by three levels of government:
- the president;
- Board of Directors;
- leaders.
Financial resources include authorized capital, reserve funds, loans received from special funds created for soft loans. The regional development bank is actively working in all areas of the economy. But more attention is paid to agriculture, the capital market, energy, transport and communications.
Inter-American Development Bank
In 1959, the IDB was established to assist the development of Latin American countries. Organization directions:
- promoting investment in Latin America;
- directing all available resources to finance important economic projects;
- investment promotion;
- assistance in expanding the foreign trade policy of participants;
- provision of technical assistance in the implementation of plans.
IADB has more than 48 members. The structure of the organization is as follows:
- management committee;
- Board of Directors;
- administration;
- presidents;
- departments.
Financial resources include subscription, reserve capital, soft loan trust funds. Most of the assets on paper exist in the form of funds that may be in demand, or guarantees of interaction in the market. The bank's operations cover all sectors of the economy, but more attention is paid to agriculture and fisheries, industry, social services, planning, reform and investment.
In addition to IADB, the Inter-American Investment Corporation, the Caribbean, and the Central American Economic Integration Credit Institution also operate in Latin America.
Domestic market
The Central Bank assures that there is no direct connection between “health” and the size of the bank. Regional development banks also play an important role in the development of the state economy. They are more efficient and better aware of the characteristics of small and medium-sized businesses. The activities of the latter depend on the availability of local loans. According to statistics, firms operating in a region with a developed financial system increase their turnover by 67% faster than enterprises in the country as a whole.
In Russia, such institutions are not very popular with customers. Entrepreneurs in the Urals, Siberia and the Far East generally cannot receive borrowed capital. They have to turn to large credit organizations. Regional development banks should be partners for such entrepreneurs. Large credit institutions such customers are not very interesting. In a government agency, the decision-making process on issuing borrowed funds may take several months. It is better to contact the regional regional development bank. The management of the institution is better acquainted with the specifics of the business. The likelihood of a positive decision is higher.
Branch - not a bank
Large credit organizations, of course, have branches in distant regions of the country. But they are usually deprived of independence and do only the technical work of collecting documents. And the decision is made by the leadership in Moscow, which may not be aware of the specifics of the region and business. Large banks prefer to avoid difficult customers. And almost all small entrepreneurs require an individual approach. Regional points are ready to delve into the particulars of business and may become an alternative in the field of banking services for small and medium enterprises.
Abbreviation
As of June 1, 2014, 888 banks were operating in Russia. This is significantly less than in Germany (1.8 thousand) and the United States (more than 5.8 thousand). The level of provision of credit services in Russia is 0.6. That is, a person has less than one credit point in the country. In the USA, this indicator is 2, and in the EU countries - 1.8. Another problem, or more precisely, a feature of the time, is that all large organizations are state structures. Sberbank, VTB (24), Gazprom and the Russian Agricultural Service serve more than 53.8% of the population. Over the past 5 years, the number of credit points in Moscow has increased sharply: from 15.4% to 22%. As a result, enterprises that are serviced in metropolitan organizations are in a more convenient position compared to organizations in Siberia or the Far East.
Financing
The development of the regional network of the bank contributes to the economic growth of the region. This is confirmed by the situation in Russia. In Siberia, there are 258 banks along with branches, and in the East there are even fewer 118. And this despite the fact that over the past 10 years, the same number have ceased to exist. No other district can boast of such indicators. Existing regional development banks are classified as small. They cannot provide the organization with the necessary resources. As a result, the level of GDP in these regions is half that of Moscow. Yes, and individuals can provide only a small range of services. This is evidenced by reviews.
The regional development bank is also evaluated by the ratio of capital to the maximum amount of credit. So, in Russia there are 140 organizations that can give a client a loan in the amount of 1 billion rubles. Of these, 37 are in Moscow, 6 in Siberia (Tyumen, Novosibirsk) and 3 in the Far East. As a result, entrepreneurs of distant districts are forced to apply for loans to large metropolitan structures or OJSC Regional Development Bank.
Way out
Regional lending institutions should develop. The Central Bank can greatly contribute to this by capitalizing on small organizations. You can also create surveillance forms that will assess the situation using an algorithm different from that used for large structures. Now there are no special measures to support small banks either at the federal level or in the Central Bank. But if local authorities pay attention to this issue, then the number of licensed banks in the region is much smaller. But even if there are such, they are not accompanied by high-profile scandals, discussion of problems in the media and subsequent panic. A similar situation occurred in 2013, when the Regional Development Bank lost its license. So far, not all deposits have been returned to customers. Over the past two years, the Central Bank revoked licenses from 62 credit organizations. Such statistics are alarming. If the situation does not change, then in 5 years the banking sector will be managed by large state financial institutions.
Conclusion
The economic and social development of the region largely depends on the entrepreneur's ability to raise funds from a local bank. In total, there are 888 credit institutions. And they are scattered across the country unevenly. As a result, entrepreneurs in Siberia and the Far East cannot use all possible types of services of credit institutions. For help, they have to turn to a large metropolitan or regional development bank. A rating conducted in 2014 showed that the largest specialized institutions in terms of equity (Russia, MDM, AK Bars) are concentrated in St. Petersburg, Novosibirsk and Kazan.