Importance Considering the insufficiency of investment resources and capital flight out of the country, it is reasonable to investigate the influence of money supply channels to the real sector of economy demonstrating the growth potential. Economy should be studied regionally and nationally in terms of internal risks concentration and systemic problems accumulated. The North Caucasian Federal District is one of such macroregions, which has premises for destroying the stability, sustainability and balance. Objectives The research unveils theoretical and methodological approaches to evaluating how the banking system influences the development of the real sector in unstable regions, provides practical guidelines to make the real and financial sectors of the North Caucasian Federal District cooperate more effectively. To address the above objectives, I examined institutional characteristics of the banking system and real sector, considering small businesses, analyzed how the banking system provided loans for the real sector, and identified factors that influenced the sustainable development of the banking system. Methods Based on statistical methods, I analyzed various aspects of banking in unstable regions, and determined trends in lending. Results The article presents scientifically proven proposals to form an effective banking system in unstable regions and address the issue of increasing the financial potential and investment attractiveness of the North Caucasian Federal District. Conclusions and Relevance It is very important for the North Caucasian Federal District to attract foreign investors and capital, and, if possible, allocate the capital to the mentioned areas, thus tackling the debt burden. As the financial system and real sector demonstrate more effective performance, the following financial conditions should be met: generating stable cash flows and settlement of payments within the financial system of areas; decreasing a percentage of payment defaults caused by the region's entities; increasing a percentage of cashless payments and transparency of financial transactions.
Keywords: banking system, lending, real sector, North Caucasian Federal District
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