The Impact of the Ownership Structure on Banks’ Performance in Russia

The paper analyzes the impact of ownership structure on bank performance in Russia covering 174 observations in 2012. The author distinguishes between state-owned, private domestic banks and foreign-owned banks. Standard indicators of bank profitability and efficiency such as return on assets (ROA) and return on equity (ROE) were used as performance determinants. The results demonstrate that foreign-owned banks in Russia are more efficient than state-owned banks and private domestic banks. Consequently, their presence in the market positively affects the banking system development. The differences in efficiency between state-owned banks and private domestic banks were not revealed. This is a rather interesting result concerning the current environment in the Russian banking sector. Thus, it is obvious that the privatization will not necessarily entail an increase in the efficiency level of the Russian banking system, which can be achieved by increasing the degree of openness of the Russian banking market to foreign competition.