The state of the regional banking system in the Russian Federation

Modernization of the Russian economy cannot take place without adequate financial support, which should be largely established through the optimization of the banking system development. The research of the current economic situations in the country shows that building an effective model of regional banking systems as a part of the national banking system in the present conditions is an extremely important factor in addressing the problems of stable economic growth. The regional banking system is part of the national banking system, its representative in the region. The size of the country predetermines the specific conditions of economic development. The efforts should be aimed primarily at eliminating the existing disparities in Russia's economic development. In particular, it is critical to address the disparities in regional development, which established due to a variety of demographic, historical, natural and climatic, administrative and other conditions affecting the economic activity of subjects of regional economy. Enterprises are unable to realize large-scale investment projects since their financial resources are limited. Global economic processes and the macroeconomic environment in Russia strongly influence the volume of foreign investment into region's economy. The inflow of foreign investors declined significantly due to the global recession so a mechanism of interaction between the real and the banking sectors should play an important role in the development of regional economy. Today, the issues related to the regional banking system functioning have been extensively reviewed in the scientific community as well as they have become the subject of debate and scientific disputes. The role of the regional banking system in the regional development is significant although the theory of its functioning and the use of its capabilities are not properly investigated. The common concepts "regional banking system" and "regional bank" are yet to be supplied with accurate and clear definitions. Without these definitions, it is impossible to start investigation of issues related to regional banking. Development of the regional segment of the Russian banking system will require particular efforts. The changes in the system of production relations in Russia, the shift of the economic focus towards diversification and overcoming raw-material orientation as well as the increasing demand for services enhance the importance of the activity of market infrastructure elements including the activity of regional banks through expanding the range of the conducted financial intermediation transactions.

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