How Do Macroeconomic and Institutional Indicators Influence Banking Efficiency in Russia

This work assesses the impact of macroeconomic and institutional factors on the efficiency of the Russian banking system. The majority of papers about Russian banks analyze cosy-efficiecncy while this research uses a profit-efficiency. Stochastic Frontier Analysis (SFA_ is applied as a method of analysis. The paper covers the period from 2014 to 2015. Exchange rate, intermidiation rate, cargo transportation index and overdue debt of the banking system are used as macroeconomic variables. Type of ownership (foreind, state and private), the location of the head office and the structure of the branch network (banks from Moscow and St. Petersburg with more than 10 branches, banks from Moscow and St. Petersburg with less than 10 branches, banks from Other regions) are used as institutional variables. The main results show that tate-owned banks are the most efficient, while foreign- and private-owned banks are at the same level of efficiency. In addition, a developed branch network increases the efficiency of banks (multi-regional banks are the most efficient). Macroeconomic factors have a significant impact on the efficiency of banks, improving the quality of the model