The WTO and the Customs Union: What Consequences for the Russian Banking Sector?

Summary:

Russia is now a member of World Trade Organization (WTO) and of the Eurasian Customs Union between Russia, Belarus and Kazakhstan. Questions remain over how this new global and regional integration will affect the competitive environment of the Russian banking services industry.

This paper shows that the mere entry of Russia into the WTO will not cause significant additional growth in the inflow of foreign investment into the Russian banking system. Changes in the structure of the Russian economy will lead to bankruptcy of some banks that are unable to diversify their business sufficiently. Credit institutions that do not have state backing or strong business clientele will have to find new niches associated with the sale of banking services to less well-off segments of the population.

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