Financial Repression and Russian Banking Sector

In the post-crisis periods governments in many countries face a debt overhang and have problems with the placement of new debt. In such circumstances, the policy of financial repression has proven its efficiency, because it allows not only to reduce the cost of servicing public debt, but also to liquidate the debt. The topic of financial repression became especially actual again after the financial crisis of 2007-2008, when Europe countries, faced with a debt crisis, have turned to this policy. This reflected in the increase of the share of government securities in the assets of national banks due to pressure exerted on them by the government. There is a similar situation in Russian bank sector: credit institutions enlarge their investments in OFZs in the post-crisis periods. Especially this effect is strong for state banks and banks in sanation. This study shows that despite the presence of the number of elements of financial repression in the Russian economy there is no evidence of pressure from the government on Russian banks at the time of placement of new debt.