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Financial Analytics: Science and Experience
 

Commercial and State-owned banks' lending for small businesses: Analysis and prospects

Vol. 9, Iss. 38, OCTOBER 2016

PDF  Article PDF Version

Received: 20 May 2016

Received in revised form: 20 September 2016

Accepted: 4 October 2016

Available online: 20 October 2016

Subject Heading: FINANCIAL INSTRUMENTS

JEL Classification: E43, F65, G21, H81

Pages: 20-33

Kostina N.N. Nosov Magnitogorsk State Technical University, Magnitogorsk, Chelyabinsk Oblast, Russian Federation
natalka-mgn@mail.ru

Danilenko N.I. Russian Presidential Academy of National Economy and Public Administration, Magnitogorsk Branch, Magnitogorsk, Chelyabinsk Oblast, Russian Federation
danilenko-nikolay@mail.ru

Ivlev A.V. Nosov Magnitogorsk State Technical University, Magnitogorsk, Chelyabinsk Oblast, Russian Federation
ivlevanton@bk.ru

Importance Small business is a very widely spread form of activity in Russia, with the State aid being a crucial condition for its development. The Ministry of Economic Development of Russia, Central Bank of Russia and Federal Corporation for Development of Small and Medium-Sized Entrepreneurship prepared the Program for Stimulating the Lending for Small and Medium-Sized Businesses involved in priority projects.
Objectives The research analyzes and elaborates proposals on granting commercial and State-owned banks’ loans to small businesses so to increment lending volumes for banks and make the respective borrowers more competitive.
Methods Relying upon economic statistics, systems analysis and comparative method, we analyzed various aspects of small business development in Russia.
Results Small and medium-sized businesses dramatically depend on political decisions. Western sanctions against Russia and subsequent responses complicate the economic situation, but open up new horizons for business development. The article presents our proposals that financial institutions may use as a tool to support small and medium-sized businesses and increase their loan portfolio.
Conclusions and Relevance Small entrepreneurship contributes to social security and stability, since it plays a palpable role in strengthening market relations even during the economic downturn and crisis. Import substitution policies can turn to be effective provided the State creates benevolent conditions for small businesses, reduce the tax burden and devise a lending mechanism that would meet the national development requirements.

Keywords: small business, State support, bank loan, loan portfolio, loan product

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