Subject The article addresses the interaction of budgetary and bank credit systems of the urban district. Objectives The aim is to increase the budget capacity of urban districts through the use of mechanisms of interaction between the fiscal and the banking system. Methods The study employs methods of analysis and synthesis, dialectical method, balancing and normative methods, system and functional comparison, methods of financial statements analysis (horizontal and vertical analysis, method of financial ratios). Results The paper unveils the interaction points of budgetary and bank credit systems of Russian urban districts, the reasons for inefficient use of temporarily idle cash by city administrations. I underpin the need for deposit interaction between the budgetary and bank credit systems of urban districts to enhance their budget capacity, and offer a scheme of interaction of these systems at the urban district level. Conclusions The offered areas of strengthening the interaction are beneficial for the both parties. The bank credit system may improve its liquidity, and, hence, solve the problem of limited access to credit resources of the real sector entities. The budgetary system may increase its revenues.
Keywords: local self-government, budget capacity, city district, banking system, budget system
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