People’s Incomes as a Potential for Development of Bank Lending: Comparative Analysis of Russian Regions

• Main Authors: Voronova Natal’ya S., Miroshnichenko Ol’ga S.
• Format: Article
• Language: English
• Published: Russian Academy of Sciences, Vologda Research Center 2018-09-01
• Series: Economic and Social Changes: Facts, Trends, Forecast
• Subjects: people’s incomes; consumer behavior; provision of loans to people; income inequality; ltv; dsti
• Online Access: http://esc.vscc.ac.ru/article/2736/full?_lang=en

The paper explores the development of bank lending to individuals in relation to Russian people’s incomes. Using the data of the Central Bank of the Russian Federation, the Federal State Statistics Service, and with the help of EXCEL software, we carry out statistical analysis of the indicators characterizing people’s satisfied demand for bank loans and compare them with the indicators of per capita income in 2010–2017, in the context of the federal districts of the Russian Federation, the city of Moscow, the Republic of Crimea and the city of Sevastopol (after 2014): we consider the volume of loans issued by banks during the year per inhabitant of the relevant territory, we calculate the correlation indicators of average per capita cash incomes and loans issued by banks per capita taking into account the purpose of lending; we estimate the distribution of the volume of loans issued per capita depending on the average per capita income. We find that the increase in per capita income is not accompanied by a proportional increase in bank loans per capita. The majority of bank loans are obtained by households with an average per capita income of up to 35,000 rubles. Having studied the development of bank loans provision to people depending on the purpose of the loan, we see that the correlation between incomes and housing loans is stronger than the correlation between incomes and other bank loans provided to people. In modern conditions, lending to individuals in Russia contributes to the adoption of high credit risks by banks, potentially reducing the possibility of improving their profitability. There are no real regulatory incentives to shift the attention of banks to high-income borrowers when providing loans to households