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Stock market capitalisation plays a significant role in creating wealth for the population, and often draws the attention of financial authorities. But what drives capitalisation growth and what is its ‘optimal’ size? Some of the answers can be found in economic science.
The Russian market is assimilating key green financial instruments: bonds, corporate lending, and mortgages. However, there are other forms of sustainable finance that could also potentially take root in the market.
Russian companies became more generous with their dividends. Corporate reports for 2005–2023 show that major corporations provide the largest payments, while third-tier issuers pay dividends most frequently. However, a focus on dividends does not guarantee a return on investment.
Cryptocurrencies have become a riskier asset than they once were and no longer add diversification to investment portfolios. Cryptoassets more and more resemble lottery tickets in terms of risk profile.
AI has become a tool of creative destruction. Companies that incorporate it into their business models will set the tone for the development of their sectors in the coming years. Perhaps AI will also cause a realignment in the trade and economic alliances of countries.
Global lenders are focused on financing development projects in good times. In times of crisis, they switch to stabilisation loans and become ‘firefighters’. This is the role being increasingly played by development banks, data from 11 countries of the Eurasian region show.
Exchange-traded funds (ETFs) are gradually supplanting all other types of funds in the financial market. Their rampant growth makes it simpler for millions of investors to enter markets. However, their expected dominance might have effects that are yet to be explored.
From 2022 on, Russian retail investors will be allowed to buy foreign exchange-traded funds (ETFs). This regulatory decision tackles several objectives, from making investments more balanced to encouraging competition among asset management companies.
New legislative requirements for communication with non-qualified investors are meant to enhance the protection of individuals in financial markets and increase market transparency by providing more comprehensive information about financial products to investors.
Experiments show that cats, monkeys, and deer can often ‘compose’ more profitable investment portfolios than those of professional investors. However, one should not rely on luck when investing.
Digitalisation is changing the payment market and consumer behaviour in many countries. This raises the question of whether it would be expedient to introduce an additional form of money that would meet the requirements of the digital age: a central bank digital currency.
The evolution of cross-border financial services has created new relations that are not regulated by any supranational body. This gives rise to the problem of regulatory arbitrage, which does not yet have a common solution.
Despite their common past, the banking markets of the largest CIS countries differ significantly in many aspects: from their level of competition, structure, and transparency to the features of the regulatory environment, and the anticrisis measures of their regulators.
The Bank of Russia is taking over the administration of the RUONIA rate, a benchmark interest rate for Russia's monetary policy and public debt. This is a part of the global benchmark interest rate reform consequential to the global financial crisis.
Adherence to high standards of corporate governance in the banking sector can reinforce the resilience of the banking system. However, existing corporate governance practices do not help curb the risks banks take.
Crowdfunding platforms have proven a promising alternative to banks. However, so far, they still seem more of an experiment whose success depends on their ability to manage existing confidence risks.
Bad debts can be both a consequence of the borrower’s reduced financial circumstances and an instrument of unfair banking. Each of these problems has its regulatory solution but the key principle should be market responsibility of the owners and managers.
A sound banking system, a moderate bad debt level, prompt recognition of the problem which bad debts pose and dealing with them effectively, are essential preconditions of not only financial stability and depositor protection but also of economic growth.
Due to the small size and volatility of the Russian money market, Russian entities choose two extremes as benchmarks for their interest rates – the key interest rate and the MosPrime rate, at which banks themselves do not lend to one another.
Five years ago, half of all Russian banks provided a full range of banking services to companies and households; now only one in three do. Banks are opting to specialize more narrowly or to move away from clear business models altogether.
The global economic slowdown is becoming a key threat to financial markets. The measures taken by central banks may prove insufficient to prevent a negative outcome.
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