Effects of bank resolution on financial stability and competitiveness of banking sector

Abstract

The paper provides an analysis of the effects of banking licence revocation by the regulator on the financial stability indicators of Russian lenders. The analysis has found mixed performance of resolution measures in terms of the financial stability of banks and their competitiveness in the wake of the banking sector resolution policy of the Bank of Russia. The authors propose a modification of the individual financial stability indicator equation developed by the regulator. The changes relate to calculating annual growth rate volatility not only for lending operations but overall with respect to the attraction and allocation of banking resources. The authors propose an equation for calculating the overall stability level of the banking sector and possible interpretations of the resulting findings in terms of the stability and competitiveness of the Russian banking sector.