Proportional Regulation and Development of the Banking Sector

Nowadays the requirements to the banking sector are significantly rising because of financial sector instability and increasing uncertainty in the economic domain. Currently, the Russian banking system is being reformed. In addition to the existing diversification of prudential regulation according to the types of banking institutions, a new law came into force in June 2007. This law introduced the regulation proportional to the complexity and risk level of banking operations. In the Central Bank’s view, the change to banks proportional regulation is a step towards banking system resolution. Therefore, it is essential to analyze the consequences of banks separation according to the level of capital and supervision requirements. The main goal of the investigation is to evaluate the level of efficiency of introducing proportional regulation into the Russian banking system. Thus, the level of banks competition will be analyzed and constituted the base of the research. Keywords: the banking system, proportional regulation, competition.