The Impact of Investment in Securities on Insolvency of Banks in Russia

Nowadays the tendency of termination of the licenses is continuing in banking sector, It obvious that each action like that is bringing its negative influence not only on partners and clients of the bank but also impacting the whole banking sector .So there is no doubt, that the research about alternative sources of incomes, as investment in the stock market , can have effect on bank sector , and highly push the stability of the field . The main purpose of the research is to detect the impact of investment in stock market on banking sector. The data used is from 200 Banks with highest actives, from 2011 to 2016.Functional dependency in built regressions are given by regression models with random effects, with panel data usage, with robust and cluster errors. The outcome of the research is showing that the investment in stock has positive correlation with stability of the banks. And in crisis periods were detected more volatility on such transactions. In addition to these the structural change in investments in Stocks and Bonds had positive impact on stability in crisis period 2014-2015, which indicate the willingness of the banks to invest in Stocks and bonds. The results are guiding the banks to invest more or reduce them, which can influence hardly in difficult economic situation inside the country. As we conclude these kinds of decisions have enormous link with bank sector stability , which is very important for Bank of Russia to detect the tricky situations as soon as possible in Financial institutions .