A financial analysis of the bitcoin exchange rate: Factors, findings, and the future

Fetisov V.D., Fetisova T.V.

Subject This article explores the trends in the exchange rate of bitcoin and its impact on the financial condition of market economy entities. Objectives The article aims to consider the changes in the bitcoin exchange rate and find ways of improving the bitcoin policy of Russia. Methods For the study, we used the empirical, systems, analytical, and other methods and approaches. We analyzed factual materials of the two-year bitcoin practices in various countries and Russia. Results The article reveals the reasons and factors of the bitcoin rate change in 2017-2018 and determines the prospects of its use in Russia. It also presents certain proposals on the formation of bitcoin policy and management in Russia. Conclusions The use of bitcoin in Russia is accompanied by huge costs of material, labor and financial resources under unjustified risks. To prevent losses of the majority of participants, the financial literacy of people and quality of personal management of workers at all levels of economy should be significantly improved.

Assessment of the financial position of insurance companies in the bank''s pledge activities

Shatalova E.P.

Subject The article examines the issues of assessing the financial position of insurance companies in the bank's credit process. Objectives The article aims to draw up a methodology adapted for use by a commercial bank and integrated into the banking credit process. Methods For the study, I used the methods of logical analysis, coefficient method, and the MDA method. Results The article presents a set of requirements for insurance companies as insurers of collateral assets, as well as the procedure for assessing their financial situation. It also offers a system of indicators for assessing the financial condition of the insurance company, which results in a credit analyst receiving a final assessment of the financial position of the insurance company with uniform characteristics, on the basis of which the bank can make managerial decisions. Conclusions and Relevance The structured method of assessing the financial position of an insurance company can be integrated into the bank's credit process at the stage of mortgage registration. The results obtained can be used by credit analysts of commercial banks in the process of credit underwriting and preparation of credit memorandums.

Cluster development financing schemes in Russia

Kholodkova V.V.

Subject The article addresses cluster structure development in Russia and problems related to financing the projects that are implemented within a cluster. Objectives The purpose of the study is to describe the main possible financing schemes for projects implemented within cluster structures, their pros and cons. Methods The study relies on the analysis of the existing legal framework and financing practices in the Russian Federation. The analysis enables a comprehensive assessment of the problem in the current economic conditions. Results The paper describes the main cluster structures, requirements to industrial clusters defined by the legislation, the existing practice of financial resources mobilization to implement projects within clusters. It considers advantages and disadvantages of venture capital funding, project financing, the use of public-private partnership schemes in cluster project realization. The role of such institutions as OAO Russian Venture Company (OAO RVC) is demonstrated as part of financing mechanism description. Furthermore, I consider the main statutory instruments and government programs that regulate project financing within clusters in the Russian Federation. Conclusions and Relevance Today, there is a restricted number of funding opportunities in the Russian Federation for projects of enterprises implemented within clusters. It is crucial to enhance the financial capacity of such enterprises to nurture the development of both specific companies and the entire industry.

Corruption and tax evasion: The relationship of social phenomena

Fedotov D.Yu.

Subject The article considers corruption and tax evasion as widespread phenomena in present social relations. Objectives The article aims to assess the level of corruption and tax evasion in Russia as well as test the hypothesis of the impact of corruption on tax evasion. Methods The study involves econometric methods. It also includes mathematical methods of processing the results of sociological surveys. The study assesses the level of corruption in Russia. Results I reveal that corruption increases the tax evasion, as the high level of corruption reduces public confidence in the government. In 2001-2017, the level of corruption and tax evasion in Russia gradually decreased. Conclusions and Relevance The article reveals the level of corruption in Russia and assesses its impact on tax evasion. The correlation coefficient between these phenomena amounts to 0.6793. Continuing the fight against corruption will help reduce tax evasion in the country. The State administration bodies can use the results obtained in the budget process and development of a tax policy.

Evaluating the efficiency of sovereign wealth fund management

Kosov M.E.

Subject The article addresses the issues of operation of sovereign wealth funds. They are created in the States where budgets strongly depend on market factors, and accumulate large volumes of financial resources. Objectives The study aims to evaluate the efficiency of the National Wealth Fund management in the Russian Federation. Methods The study draws on methods of synthesis, analysis, graphical techniques, economic analysis, comparisons and analogies. Results The paper evaluates the efficiency of the National Wealth Fund management. The findings may be helpful for investment strategy (investment portfolio) development of the Russian National Wealth Fund. Conclusions The National Welfare Fund plays an important role in the macroeconomic policy of the Russian Federation. After abolition of the Reserve Fund in 2018, the National Welfare Fund will face a wide range of tasks, like financing directed to balance the pension insurance system, financing of the Federal budget deficit, and joint financing of voluntary pension savings. Therefore, it is extremely important for the National Welfare Fund to perform effective investing activities. The paper ascertains that the current investment strategy of the National Welfare Fund of the Russian Federation is far from being effective.

Evaluation of the main monetary indicators in Russia and abroad

Vyborova E.N.

Subject The article analyzes indicators that characterize the money turnover and its determining factors. Objectives The aim of the study is to evaluate money supply in the Russian Federation, Australia, Sweden, Denmark, the CIS member States, China, Japan, South Korea at the present stage of development. Methods The study rests on multivariate statistics methods, using the Statgraphics statistical software package. Results In the Russian Federation, the money supply has displayed a steady upward trend. The money supply of the leading partner countries tends to grow. The money supply of the analyzed countries depends largely on external debt, GDP, exports, imports, international reserves. Conclusions The Russian Federation maintains a steady and liquid economic position: the country has a considerable monetary stock demonstrating a high rate of growth.

Financial prerequisites of integration processes in the power supply business of Russia

Fedorov Ya.P.

Subject This article discusses the financial and economic conditions and causes of integration processes in the energy supply business in Russia. Objectives The article aims to reveal and describe the financial and economic situation and causes of integration processes in the energy supply business in Russia. Methods For the study, I used empirical and logical constructions, analysis and synthesis, generalization, a systems approach, and the methods of comparative analysis. Results The article determines the main financial-and-economic and organizational-and-legal aspects of integration processes in the industry. As part of the financial and economic analysis of the country's largest energy supply companies, it reveals the most common problems of the industry. Conclusions and Relevance The key feature of the development of the energy supply industry of Russia is its consolidation and the market quitting of small companies' that do not have lobbying resources. The results of the study can be used to improve the State regulation of the industry and assess the development prospects of the industry by specialists of analysis services of specialized bodies of State power and energy providers.

Higher school students'' participation in financial literacy of population in the region

Dmitrieva O.Yu., Krylov V.V., Dmitriev Yu.P.

Subject The article addresses financial literacy and financial culture of Russian citizens. Involving students majoring in economics in activities aimed at financial education of Russian citizens is a possible solution to problems related to the present-day society development. Objectives The aim is to reveal and evaluate the potential for engaging the higher school students in people's financial awareness enhancement in regions. Methods The study draws on general scientific methods, economic, statistical, and abstract-logical methods and techniques. Results The proportion of rural population in Chuvashia is high. One of the ways to build financial culture of people in the Republic is to nurture volunteering activities and voluntary initiatives among university students in the field of financial education, to inform and give advice to village inhabitants about the existing forms of State financial and credit support to development of agriculture, village areas, private farm households, and rural cooperatives. The findings may be used for improving the system of financial literacy in regions with similar parameters of social and economic development. Conclusions Direct participation of socially active youth in the financial education of rural population, on the one hand, contributes to personal and professional self-realization of volunteer student, and on the other hand, to formation and spread of financial knowledge in regions.

Identification of financial non-compliance in Russian companies: Tools and their testing

Gudova M.R.

Subject The article investigates the financial non-compliance in organizations, which includes instances of financial irregularity, legal offense, corporate fraud, and other destructive events of economic life. Objectives The focus is on introducing an effective model to identify instances of financial non-compliance by organizations through testing the tools being the most appropriate for Russian economic conditions. Methods I use the data on 700 Russian organizations, including those that Russian courts found guilty of gross violation of accounting (financial) requirements. I update the equations of tested models on a sample of Russian organizations by using the tools of a logit model in accordance with initial methodology for model development. Results I assessed the classification accuracy of Russian organizations by pilot basic models based on the analysis of financial non-compliance identification, and proved the low accuracy of foreign basic models in Russian economic conditions. It is reasonable to use the findings to improve the mechanism of mitigating the risk of fraudulent actions by economic entities and increasing the transparency of the corporate sector, including through reducing the unintentional misstatement and shrinking the off-the-books economy. Conclusions It is crucial to have effective tools to minimize financial and non-financial damage from financial non-compliance of companies. The paper confirms low accuracy of tested models for identifying financial non-compliance in Russian economic conditions. Updating the equations enabled to enhance the model accuracy, however, it is insufficient for significant reduction of investors' and creditors' losses.

Methodological approaches to organization of retail NPL workout activities in the bank

Dolzhenko R.A.

Subject The article considers the activities of bank units dealing with non-performing retail loans workout. Objectives The aim is to develop methodological approaches to workout management of non-performing loans (NPL) of individuals, describe the basic business process and the role of all parties of the bank involved therein. Methods I employ the main methods of research, like abstract-logical, structural and functional. I also use results of works by foreign and Russian scientists on organization of activities with troubled assets in banks. The approaches to NPL workout were tested in a number of financial organizations of the Russian Federation. Results The paper describes conditions for classifying loans to the problem category, identifies key bank units dealing with NPLs, highlights the main steps of the workout procedure, and offers a matrix of debt settlement tools. It also presents algorithms and processes of dealing with debts in special cases: within the bankruptcy procedure and settlement of past due debt caused through the bank's fault. Conclusions The paper presents a tool that can be used by any financial institution to organize the effective work of its units with bad debts. The developed methodology is especially relevant for financial institutions planning to arrange workout activities in a consistent manner.

Modeling the operational risk assessment of retail banking business line in express lending

Goremykina G.I., Shchukina N.A., Mastyaeva I.N.

Subject The upward trend in instant loans necessitates formalized tools to simulate and analyze the Retail Banking business line in express lending. The operational risk assessment is one of the main modeling objects of the said business line. Objectives We aim to develop an aggregated model to assess risks in instant lending that correspond to two out of seven event type categories of operational risk associated with default on loans, which were standardized by the Basel Committee on Banking Supervision. Methods The study draws on the simulation modeling methodology. Results We built an aggregated economic and mathematical model to assess risks in express lending. The model considers the operational risk associated with opportunistic behavior by agents. Using the model, we developed a methodology and algorithm for assessment. The paper also provides a classification of retail outlets that takes into account the potential for opportunistic behavior by agents. Conclusions Our simulation observations enable an aggregate assessment of external and internal operational risks inherent in the Retail Banking business line of banking outlets in the current period. The findings may be applied by banks and microlenders to assess operational risks in instant lending and create a system to manage them.

Modern financial control: Challenges, contradictions, and digital development tools

Tatuev A.A., Ovcharova N.I., Galyuta O.N., Zalevskaya M.A.

Subject This paper discusses the perspective development of modern financial control instruments due to the increasing digitization of the financial system. The paper also examines the challenges and contradictions facing financial control at the present time. Objectives The paper aims to justify the need for advanced financial control through embedding in the ecosystems of financial markets and digital financial infrastructure with the preservation and development of its external character. Methods For the study, we used methods of generalization and structural design. Results The paper says that the main contradiction of the modern financial control is the increasing discrepancy of its organizational and managerial forms to the challenges of financialisation and digitization. The paper proposes to form adapted digital instruments. Conclusions and Relevance Development of priorities of modern financial control is involves its new organization on the basis of principles of openness, permanence and universality of all participants of financial relations. The results obtained can be used to supplement the implemented main directions of financial technologies development with the system set of digital instruments of financial control.

Regional banks and financial technology: Confrontation or cooperation?

Zver'kova T.N.

Subject This article deals with the issues of search of new areas of cooperation of regional banks and FinTech-companies in order to improve and personalize customer services. Objectives The article aims to analyze the current situation in the banking market in terms of competition between credit institutions and FinTech-companies. The article also explores the capabilities of regional banks to change the business model to cooperate with FinTech. Methods For the study, I used the methods of expert assessment and generalization. Results The article says that at present, the regional banks lack financial resources and technological facilities to compete with FinTech-companies in the delivery of financial services. Regional banks can only adopt a cooperation strategy as a basis for partnership. Conclusions Regional banks should not only adhere to all lines and areas of financial technology development. They need to concentrate on the development and customization of customer services, providing customers with well-thought-out individual solutions and recommendations using various interaction channels.

Securities portfolio selection using the risk margin

Maleeva E.A., Bel'sner O.A., Kritskii O.L.

Subject The article considers the issues of securities portfolio building, using the risk margin value, or Value-at-Risk (VaR) measure. Objectives The article aims to study the impact of risk margin on the amount of total capital and the optimal portfolio allocation. It is necessary to update the classical approach of Markowitz and adapt it to the current requirements in the banking and financial spheres. Methods For the study, we used the Benati-Rizzi methodology and the mixed-integer linear programming algorithm. Results We offer our own portfolio selection model taking into account the risk margin value. The article shows the portfolios selected according to the classical algorithm of Markowitz and taking into account the VaR constraints, as well as the results of comparison of the yield and value of two portfolios composed of the shares included in the MICEX 10 Index. The article also shows the results of calculating the risk and yield of passive portfolio investments. Conclusions and Relevance The presented model of portfolio selection taking into account the margin risk value helps reduce initial investments, weaken the influence of stock market slump on the portfolio value, and increase the investment ex post return at the risk level comparable to the classical methodology of Markowitz. The use of the Benati-Rizzi method is convenient for creating a wide range of investment portfolios for unsophisticated investors with different risk aversion attitude.

Tax revenues at the municipal level in federal states

Smirnov O.O.

Subject The article addresses the issues of tax revenues of local government authorities in a federal State. Objectives The purpose of the study is to explore sources of tax revenues at the municipal level, describe the specifics of tax revenues of local authorities, and identify the most important revenue items of local budgets in federal States. Methods The study employs formalization, generalization, classification, theoretical analysis, and synthesis. It rests on scientific works by foreign and national researchers on local taxation, public finance, the theory of fiscal federalism, and tax sharing. Results Allocation of fiscal powers in a federal State should correspond to the distribution of tasks: public services nationwide should be financed at the federal level, and services with limited regional benefits - at the regional and local levels. Real estate and land should be subject to tax at the local level. In addition, special fees may be charged to consider the benefits of public services. These principles are reflected in the tax system of the USA, Canada, Germany, Russia. The findings may be applied to reforming the Federal laws on finance and fiscal policy. Conclusions The findings reveal the complex mechanism of the fiscal system, systematize types of taxes for each level of government, and underpin the importance of municipal level in the overall financial system of a federal State.

Using the international practices to encourage innovations in Russia: A tax aspect

Sedash T.N., Tyutyukina E.B.

Subject The article examines Russia's lag behind the developed countries in production of innovation products and scientific developments commercialization. Objectives The article aims to analyze current tax policies of innovation stimulating and develop proposals to adapt foreign best practices in Russia. Methods For the study, we used formal logic, systems approach, and the comparative analysis technique. Results Having analyzed the practices of granting tax privileges in different countries and taking into account these practices and the Russian tax legislation in the field of innovation activity stimulation, we offer certain recommendations on improvement of the tax policy of Russia and granting or change of tax privileges.

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