The Effect of Economic Sanctions on the Development and Performance of the Russian Financial System: Results and Countermeasures

Sanctions against Russia have been introduced for 6 years and are one of the important factors in the crisis outbreak of 2014-2015. A significant drop in oil prices, the depreciation of the ruble, the growth of domestic debt, and inflation, all this occurred after the events in Ukraine and the introduction of the first restrictions during 2014. The impact of sanctions is a frequent subject of controversy since it is difficult to assess the real effect of political actions on economic indicators. In the framework of this work, modified indices of the intensity of sanctions and counter-sanctions were calculated to estimate the effect of restrictions in the form of a quantitative variable on the financial system of the Russian Federation. Using high-frequency data for the VECM model, panel data on the corporate sector and Driscoll-Cray regression with fixed effects, indicators were identified that were most and least influenced by the calculated indices, and the quantitative contribution of sanctions and counter-sanctions to the market capitalization of Russian companies was estimated.