Role of regional banks in sustainable development of
Role of regional banks in sustainable development of regions Kanygina Nadezda Moscow Sate University named after M. V. Lomonosov Solovey Tatiyana Saint-Petersburg State University
Role of regional banks in sustainable development of regions Research goal is to systematize the economic factors of regional development based on cases of Russia and Germany, to identify the role of regional banks among them and to identify the correlation between the SMEs businesses activity in the regions and the effective credit policy of regional banks. Q 1 Which factors of sustainable development of regions are similar/ different in Germany and Russia? Q 2 Is there any correlation between regional banks effective policy and SMEs activity? Q 3 Analyses of region sustainability development report to find out the role of region banks and credit institution
Role of regional banks in sustainable development of regions Even though in 2019 lending to business has increased in Russia, there are still problems with availability of credits in regions Top 10 regions with the highest share of overdue indebtedness to legal entities and individual entrepreneurs Source: Bank of the Russian Federation Number of credit organizations in Russia and federal districts Source: Bank of the Russian Federation
Role of regional banks in sustainable development of regions Distribution of credits given to legal entities and individual entrepreneurs in 2019, depending on the location of credit organizations and their branches Source: Bank of the Russian Federation
Role of regional banks in sustainable development of regions Literature review «It’s nessesary to examine the ways in which sustainable development has also been invoked as a necessary dimension of the new regional institutional architecture» (Haughton & Counsell, 2004) «It is widely recognised that achievement of the economic, social, environmental, intra- and inter-generational goals of sustainable development requires an effective social order (governance) and coordinated actions at various levels (individual, organisational, community, regional, national, transnational)» (Veisi et. al, 2012) «These are: change management mechanisms, including pilot activities; prioritisation; planning and decision-making mechanisms; participation mechanisms; negotiation and conflict management; information systems; monitoring and accountability mechanisms; communication and aware ness-raising mechanisms; financial resource mobilisation and allocation; strategic planning mechanisms; national development plans and other national planning processes; and inter departmental coordinating processes» (Clive and Kirkpatrick, 2006)
Role of regional banks in sustainable development of regions Economic instruments for environmental protection mechanism (cases of Iran) Changing the trends of energy consumption to rebuild the economic system (Veisi et. al, 2012) 1. Directing subsidies and easy-term loan towards green activities and new energies and Eco-labels as a tool to change behaviour of consumers and producers 2. Changing the trends of energy consumption to rebuild the economic system 3. Increasing tax on the pollution which causes global warming and environmental degradation 4. Taxing depletion and pollution to decrease the rate of resource throughput per unit of economic activity and relieve any growing pressure on the natural environment
Role of regional banks in sustainable development of regions Sustainable regional planning cases of Germany (Birkmann, 2003) Regional planning can be seen as a 'bridge' between local level and state level planning. It is regarded as a common task to be executed jointly by the state and the municipalities (Turowski, 2002). The main fields of competence at the regional level are: housing; urban and residential planning (regional level); traffic; school and sports infrastructure; the protection of nature and the conservation of landscape; and recreation and leisure. Sustainable Development regional indicators: • focus on a target group; • be linked to goals and targets of spatial planning; • identify the functions they serve; • be based on data which are readily avail able; • only measure important key-elements in stead of trying to indicate all aspects; • integrate macro- and project-oriented indicators; • look at trends and developments
Role of regional banks in sustainable development of regions Financial infrastructure for sustainable development (Wright et. al, 2018) 1. Shift from project-level to national or international-level reforms to support sustainable infrastructure, for example through support for 2050 planning processes; 2. Systemically use innovative finance mechanisms to mobilise private finance for sustainable infrastructure and initiate bankable projects; and find mechanisms to pay for institutional changes to deliver sustainable infrastructure; 3. 3. Transform existing infrastructure including putting energy efficiency first and recognizing energy efficiency as infrastructure; 4. Strengthen and improve existing infrastructure safeguards as well as building institutional capacity to do sustainability assessments; 5. Strategically identify gaps in the existing portfolio; 6. Better tie the benefits of sustainable infrastructure to other co-benefits and sustainable development goals; 7. Build the capacity of staff and clients to keep track of the latest trends and technologies.
Role of regional banks in sustainable development of regions Role of commercial banks in sustainable development Commercial banks’ commitment to the EPs provides an opportunity to improve environmental and social practice. The EP banks are committed to conduct environmental and social assessments according to IFC guidelines. The introduction of the EPs is expected to lead to an improvement in the sustainable development impacts of the projects funded through project finance. EPs provide a window of opportunity through which to scrutinise commercial banks’ practice. Since EPs are a public commitment made by the banks and as they are linked to familiar procedures such as the IFC guidelines, they enable civil society to intervene in the process and to promote/advocate better practice where non-compliance is suspected. One of the principal motivations of the banks to engage with the EPs is to have some assurance that their financing actions will not become subject to negative publicity (Spek 2006). Therefore, damage to the banks’ reputation through NGO accusations of non-compliance with the EPs can be a key factor in a bank’s decision about funding a project. Furthermore, as EPs are based on IFC guidelines, serious questions will arise regarding commercial banks’ social and environmental due diligence if they decide to finance a project which the IFC has rejected.
Role of regional banks in sustainable development of regions Thank you!
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