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Financial Journal Vol.13 No.2 2021

CONTENTS

Vladimir V. Vagin, Ekaterina S. Shugrina
The Role of Participatory Budgeting in Forming an Ecosystem of Civic Participation in State and Municipal Governance,
 p. 9-24

Abstract
The purpose of the article is to substantiate the ecosystem approach as a basis for building a model of citizen participation in state and municipal governance, manifested in the laws of the Russian Federation, strategic planning documents, and other regulations, as well as in participatory practices of budget decisions. The ecosystem of citizen participation in governance is an urgent need for the modern stage of development of civil society and the entire complex of state–civil relations in Russia. The creation of such an ecosystem can increase the efficiency of state and municipal governance, include citizens and civil society institutions in the process of selecting priorities for the actions of public authorities, and reduce the protest potential caused by the lack of a comprehensive toolkit for citizen participation in governance. Among the first steps toward the formation of this ecosystem is the development of a federal law on public participation in governance. This law should become the basis for the inclusion in sectoral legislation of provisions governing relations between public authorities and citizens directly involved in decision-making on state and municipal governance issues. An important role in the deployment of the ecosystem is played by the development and implementation of a set of measures aimed at including the issues of citizen participation in the activities of state programs and national projects of the Russian Federation, implemented at all levels of public authority. The article also defines the basic principles of the development of the civic participation ecosystem.
Keywords: participatory budgeting, economic ecosystem, ecosystem of civic participation, citizen engagement in governance, law on public participation
JEL: H72, R51, R58
For citation: Vagin V.V., Shugrina E.S. The Role of Participatory Budgeting in Forming an Ecosystem of Civic Participation in State and Municipal Governance. Financial Journal, 2021, vol. 13, no. 2, pp. 9–24 (In Russ.). https://doi.org/10.31107/2075-1990-2021-2-9-24.

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Giovanni Allegretti, Matteo Bassoli, Greta Colavolpe
On the Verge of Institutionalisation? Participatory Budgeting Evidence in Five Italian Regions, p. 25-45
Abstract
Over the past few years, Italy has been setting the stage for different democratic innovations, especially those that have been implemented at municipal (or sub-municipal) level in different parts of the country. The expansion of Participatory Budgeting has been a remarkable one, accompanied by the diffusion of regional laws that were adopted to promote a culture of more intense civic participation. Moving from an overview of the recent diffusion of Participatory Budgeting in different areas of the country, this article proposes a reflection on what kind of added value the existence of this legal provision has led to the promotion of participation at a regional level and what this may represent. The construction of the Italian branch of Participatory Budgeting’s World Atlas offers an opportunity to assess legal provisions’ contribution to the diffusion and enrootment of participatory practices, especially in smaller-scale municipalities. Through zooming into some cases (such as Sicily, Emilia Romagna, Apulia and Tuscany, or Lazio in the last few years) the authors argue that the formalisation of participatory practices into legal frameworks today is an important but not a sufficient factor that diffuses and enroots participatory culture in local territories, and that a supplement of monitoring structures and detailed studies would help make challenges and added values of regional law frameworks clearer.
Keywords: participatory budgeting, institutionalisation, regional laws, participation incentives, citizens engagement, public policies, and civic engagement
JEL: O35, K30, N44, L38
For citation: Allegretti G., Bassoli M., Colavolpe G. On the Verge of Institutionalisation? Participatory Budgeting Evidence in Five Italian Regions. Financial Journal, 2021, vol. 13, no. 2, pp. 25–45. https://doi.org/10.31107/2075-1990-2021-2-25-45.

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Tatiana I. Vinogradova
Participatory Budgeting as a Tool Contributing to the Achievement of the Sustainable Development Goals, p. 46-60
Abstract
The paper investigates the participatory budgeting phenomenon in how it may accelerate many of the Sustainable Development Goals (SDGs) and support governments in reaching targets of the 2030 Agenda. The article analyzes the links between public participation in the budget process and sustainable development, illustrates the difference between participatory budgeting and other forms of public participation, and highlights the main effects of participatory budgeting. Results emerged from the analysis are that participatory budgeting as an adaptive mechanism can be integrated into the national objectives for the localization of the 2030 Agenda; that as a small-scale tool it can become a mechanism for testing numerous innovative approaches to public services provision; and that the “sustainable community creation” effect is the most important contribution to the Sustainable Development Goals.
Keywords: participatory budgeting, public participation in the budget process, Sustainable Development Goals, Open Budget Index, voluntary national review
JEL: F53, F55, H72, Q01
For citation: Vinogradova T.I. Participatory Budgeting as a Tool Contributing to the Achievement of the Sustainable Development Goals. Financial Journal, 2021, vol. 13, no. 2, pp. 46–60 (In Russ.). https://doi.org/10.31107/2075-1990-2021-2-46-60.

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Natalia G. Lukyanova
Saint Petersburg Experience of Participatory Budgeting, p. 61-69
Abstract
The article is devoted to summarizing the experience of implementing participatory budgeting practices in Saint Petersburg over a five-year period as well as the role and forms of citizen involvement in budget decision-making. An innovative form of public discussion, through the participation of citizens in the work of the budget commission, allowed one not only to attract a significant number of citizens to solve the problems of the metropolis, but also to increase the efficiency of budget fund spending. Special attention is paid to the testing of a new type of public participation in the development of the urban environment, namely participatory design, one of the effects of which is the possibility of attracting extra-budgetary sources of funding. The practice of participatory design is already in demand among potential investors and has shown good results in projects aimed at the development and improvement of newly built-up areas. School participatory budgeting practices were successful as well, in which high school students were asked to work out projects not only for the development of school infrastructure, but also that of the territory of Saint Petersburg’s districts. The experience gained allowed us to identify the main disadvantages and advantages of different practices, which will be taken into account when scaling them. 
Keywords: participatory budgeting, Your Budget project, involvement of citizens in budget decisionmaking, budget commission, participatory design
JEL: H41, H72
For citation: Lukyanova N.G. Saint Petersburg Experience of Participatory Budgeting. Financial Journal, 2021, vol. 13, no. 2, pp. 61–69 (In Russ.). https://doi.org/2075-1990-2021-2-61-69.

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Elena M. Mrachek, Irina V. Valyushitskaya
The Role of Project Centers in the Development of Participatory Budgeting: The Practice of the Krasnoyarsk Territory, p. 70-82
Abstract
Over the past decade, the practice of participatory budgeting has been getting increasingly widespread in Russian regions, its implementation taking place through a variety of methods. Using the Project Center of the Krasnoyarsk Territory as an example, the article examines the experience of information, methodological and educational support of the Program to Support Local Initiatives. The authors describe the structure and development of the integrated support system as well as the approaches to the implementation of educational support, highlight the specific features of information and methodological support for program participants, and summarize the results of the implementation of the regional Program to Support Local Initiatives.
Keywords: participatory budgeting, project center, additional professional education, Program to Support Local Initiatives
JEL: H41, H72
For citation: Mrachek E.M., Valyushitskaya I.V. The Role of Project Centers in the Development of Participatory Budgeting: The Practice of the Krasnoyarsk Territory. Financial Journal, 2021, vol. 13, no. 2, pp. 70–82 (In Russ.). https://doi.org/10.31107/2075-1990-2021-2-70-82.

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Natalia G. Ivanova, Vitalii A. Fedosov
Goal Setting of Youth Practices of Participatory Budgeting, p. 83-92
Abstract
Participatory budgeting in the Russian Federation is experiencing a new round of development. The practices of participatory budgeting, which are implemented by state and local governments, are becoming more and more diverse. Some of them involve people who are not well-represented in standard practices, for example, people with disabilities, young people etc. The authors conduct a study of the development of participatory budgeting practices for young people, highlight their characteristic features, and summarize foreign and Russian experience. A key aspect of designing the practice of participatory budgeting is its goal setting. The article systematizes the goals of participatory budgeting practices for “adults” and, based on the available data, determines the priorities of goal setting for youth participatory budgeting practices. The authors substantiate the relationship between the practices of participatory budgeting for young people and programs to improve budget literacy. 
Keywords: youth practices of participatory budgeting, school practices of participatory budgeting, goal setting, budget literacy
JEL: H72, R50
For citation: Ivanova N.G., Fedosov V.A. Goal Setting of Youth Practices of Participatory Budgeting. Financial Journal, 2021, vol. 13, no. 2, pp. 83–92 (In Russ.). https://doi.org/10.31107/2075-1990-2021-2-83-92.

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Mikhail V. Milchakov
Implementation of Regional Development Priorities Under the Conditions of the COVID-19 Pandemic, p. 93-113
Abstract
Due to historical features and the heterogeneity of the economic landscape, the regions of Russia are characterized by significant disparities in the level of socioeconomic development. In order to manage regional development, a number of important strategic documents have been adopted, including the Spatial Development Strategy. The tasks of supporting problem regions and developing the largest agglomerations are articulated in these documents. In the context of the pandemic, new challenges have emerged related to slowing economic growth and budget constraints. The article examines the specifics of the formation of individual programs for the socioeconomic development of problem regions, as well as the situation of cities with more than 1 million inhabitants during the pandemic. The author presents proposals for improving the measures included in the Spatial Development Strategy.
Keywords: spatial development strategy, intergovernmental fiscal relations, intergovernmental transfers, national projects, regional budgets, agglomerations, individual programs, balanced development, interregional inequality, pandemic
JEL: H61, H72, H77, R11, R58, P25
For citation: Milchakov M.V., Implementation of Regional Development Priorities Under the Conditions of the COVID-19 Pandemic. Financial Journal, 2021, vol. 13, no. 2, pp. 93–113 (In Russ.). https://doi.org/10.31107/2075-1990-2021-2-93-113.

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Vladislav V. Bukharsky
Fiscal Decentralization and Incentives of Local Authorities in the Russian Federation, p. 114-129
Abstract
This article examines the impact of intraregional fiscal decentralization on fiscal incentives for local governments in the Russian Federation. It is expected that decentralization contributes to the economic development of territories through two channels: 1) a higher level of budgetary (tax) decentralization gives more opportunities to local authorities to realize the economic potential of the territory; 2) stable decentralization of revenue sources preserves incentives for local authorities to realize such opportunities. In comparison with the widespread approach to measuring these incentives in terms of gross regional product, the author uses indicators of entrepreneurship, the development of which is mostly within the competence of local authorities. As a measure and stability of decentralization, the norms for deducting revenues to local budgets are used. No clear and conclusive evidence of the impact of decentralization is found: due to the low financial security of subnational budgets overall, the transfer of standards can rather be understood as financial assistance to the lower budget, in particular because the size of the average transferred standard grows with the level of subsidies in the region. At the same time, there are certain positive results: the very fact of the transfer of the revenues levied in connection with the application of the simplified taxation system is accompanied by an increase in entrepreneurial activity in the region. A similar effect is exerted by the stability of the revenues on personal income tax and corporate property tax. In general, it can also be pointed out that local authorities have low indicators of the level and stability (rigidity) of budget decentralization.
Keywords: fiscal decentralization, hard budget constraints, soft budget constraints, fiscal incentives, local governments, entrepreneurship
JEL: H61, H70, H71
For citation: Bukharsky V.V. Fiscal Decentralization and Incentives of Local Authorities in the Russian Federation. Financial Journal, 2021, vol. 13, no. 2, pp. 114–129 (In Russ.). https://doi.org/10.31107/2075-1990-2021-2-114-129.

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Financial Journal Vol.13 No.1 2021

CONTENTS

Valery V. Kizilov
Some Macroeconomic Consequences of COVID-19: Specifics of the 2020 World Economic Crisis,
p. 9-27
Abstract
In 2020, almost all large countries experienced a decline in GDP and other indicators of economic activity. This trend followed the news about the COVID-19 pandemic and had several features typical for cyclical economic crises. At the starting point, both demand and supply factors were negatively affected. This paper looks into data on GDP, retail sales and foreign trade dynamics in the first nine months of 2020, and analyzes the difference between developed and developing countries. Specific phenomena are observed: Germany and its small neighbors had relatively mild crises; developed countries had their trade balances deteriorating; the trade between the USA and China revived; and American deficit has been growing since April 2020. Some hypotheses to explain the above are offered. For instance, the German economy might have been able to adapt swiftly due to greater freedom of entrepreneurship than in France and Italy and due to the lowest debt ratios among G7 countries. The trade balances of developed countries deteriorated, possibly, because of a decline in production as a result of anti-COVID lockdowns, with consumption encouraged by stimulating policy measures.
Keywords: economic crisis, economic cycle, supply shock, foreign trade, public debt, investment climate, economic freedom, COVID-19
JEL: E32, E65, F14, F44
For citation: Kizilov V.V. Some Macroeconomic Consequences of COVID-19: Specifics of the 2020 World Economic Crisis. Financial Journal, 2021, vol. 13, no. 1, pp. 9–27 (In Russ.). DOI: 10.31107/2075-1990-2021-1-9-27.

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Yelena I. Andreeva, Dmitry G. Bychkov, Olesya A. Feoktistova
COVID-19 and Anti-Crisis Social Support,
 p. 28-38
Abstract
The authors analyze the response of the Russian government to the shrinking of household incomes during the 2020 economic crisis — the social support measures that were put in place to check the increase in poverty, and the social groups that were targeted by direct federal cash benefits. The anticrisis social support measures in Russia were, on the whole, comparable in composition and scope to what the governments in other countries were doing. A special feature of the Russian approach was that the new social benefits and the increased amounts of already existing benefits were addressed exclusively to families with children and were granted irrespective of household income levels. The authors estimate that the additional social support benefits, had they been implemented before the crisis, would have reduced the pre-crisis level of poverty by almost one third, although seven out of ten Russian households were left out of this additional support because they had no underage children. This leads to the conclusion that, in the future, social support policies must change to meet new challenges not only quickly, as they did during the last year’s crisis, but also in a more targeted manner.
Keywords: level of poverty, depth of poverty, monetary incomes of the population, social benefits, effectiveness of social support measures
JEL: I32, I38
For citation: Andreeva Ye.I., Bychkov D.G, Feoktistova O.A. COVID-19 and Anti-Crisis Social Support. Financial Journal, 2021, vol. 13, no. 1, pp. 28–38 (In Russ.). DOI: 10.31107/2075-1990-2021-1-28-38.

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Anton V. Gorodnichev, Tatiana V. Kulakova, Maria A. Moiseeva
Dynamics of Russian Cities Budget Autonomy in the Transition to Multi-Level Governance,
 p. 39-57
Abstract 
Throughout the period after the municipal reform in 2003, the governing of Russian cities has been changing. A city as an object of governance is located at the intersection of interests of different levels of public authorities and is not limited only to local authorities This article investigates how budget autonomy of Russian cities has been changing for the last 16 years, and how exogenous economic shocks and large-scale federal initiatives such as the “May Decrees” have influenced the budget autonomy of Russian cities. The paper considers a hypothesis that there was a transition to multi-level governance of Russian cities in 2006–2019, which led to significant reduction of the budget autonomy. Budgets of the 35 largest cities of Russia (except for city-regions like Moscow and Saint Petersburg) were collected and analyzed in terms of their revenue and expenditure sections to test the proposed hypothesis. The relationship between the economic level of development and budget sufficiency was investigated with cluster analysis. The main result of this research is that Russian cities have become dependent on the financial grants from regional governments since there is no national policy of stimulating the economic development of cities. The national economic crisis of 2014 accelerated the process of governance centralization. In addition, the budget autonomy of municipalities was reduced due to the fact that achieving indicators of the May Decrees had become the primary objective for the public authorities. The share of the income tax in local budgets increased significantly although the share and diversity of other income sources decreased.
Keywords: urban economics, municipal budgets, urban governance, multi-level governance, budget autonomy, urban planning, the May Decrees
JEL: R51
For citation: Gorodnichev A.V., Kulakova T.V., Moiseeva M.A. Dynamics of Russian Cities Budget Autonomy in the Transition to Multi-Level Governance. Financial Journal, 2021, vol. 13, no. 1, pp. 39–57 (In Russ.). DOI: 10.31107/2075-1990-2021-1-39-57.

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Boris I. Alekhin
Oil and the Ruble: Collapse of Cointegration,
 p. 58-74
Abstract
Oil still contributes around 30 % to Russia's commodity export earnings, therefore the impact of oil prices on Ruble's exchange rate is of current interest to Russian economists. Instruments of time series analysis were used to test a proposition that the Russian ruble’s exchange rate has become less dependent on Brent crude oil price in recent years. We obtained 1,095 weekly observations for years 2000 to 2020 were obtained from FINAM company website. Our empirical model is a linear regression of the ruble’s exchange rate on Brent crude oil price. The Bai-Perron test has identified three structural breaks in the data corresponding to four chronological regimes. The Engle-Granger cointegration test has found both the rate and the price to be non-stationary in all regimes while cointegration was found only in the third regime (September 12, 2011 – October 23, 2017). The main reasons for collapse of cointegration in the fourth regime (October 30, 2017 – December 28, 2020) are 1) successful efforts by oil-producing countries to curb oil production, 2) decline in Russian import of goods and services, 3) Bank of Russia’s contractionary monetary policy, 4) built-in exchange rate stabilizer activated by the budget rule, and 5) anti-Russian sanctions. Cointegration, as it turns out, comes and goes.
Keywords: oil, ruble, correlation, cointegration
JEL: E31, F31, F33
Acknowledgments: The author is grateful to the referee for constructive criticism of the manuscript.
For citation: Alekhin B.I. Oil and the Ruble: Collapse of Cointegration Financial Journal, 2021, vol. 13, no. 1, pp. 58–74 (In Russ.). DOI: 10.31107/2075-1990-2021-1-58-74.

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Natalya A. Khutorova
Global Catastrophe Bond Market and the Prospects of Its Formation in the Russian Federation,
 p. 75-92
Abstract
The article is devoted to the development of instruments for catastrophe risk financing. The state of the global market for disaster risk financing is analyzed in order to identify the main development trends and the possibilities of using conceptual approaches in the Russian practice of the financial market. It is proven that the development of the catastrophe bond market has prospects in conditions of permanent instability, since catastrophe bonds are unique and highly attractive due to the lack of correlation with macroeconomic events. It is suggested that the instruments of catastrophe risk financing can be considered in the context of the development of sustainable finance. The paper identifies the main problems slowing down the development of the Russian catastrophe bond market, and formulates proposals aimed at developing the market for insurance-linked securities (ILS) in the Russian Federation. Pilot CAT bonds emission prospectuses should be based on structured bonds, with elements of a subordinated bond. There is a need to introduce into the Russian legal field a term defining ILS as a category. It is proposed to register special purpose vehicles (SPVs) and catastrophe funds in Russian offshores. The Russian analogue of catastrophe funds should be a closed-end investment fund with high funding for qualified investors. It is proposed to update the formula for calculating the creation of and the procedure for using reserve funds, in particular with the use of catastrophe risk financing tools. A pilot issue of CAT bonds is proposed to be conducted on behalf of VEB.RF, as bonds sponsoring regions exposed to high natural risks. In the process of developing socially responsible investor practice and tools for socially responsible investments, it is suggested to establish a Russian “Green Index” and to create green ETFs in Russia. Due diligence (DD) approaches are recommended for decisions on issuing catastrophe bonds.
Keywords: CAT bonds, ILS, financial markets, catastrophe risk financing, risks
JEL: G10, G18
For citation: Khutorova N.A. Global Catastrophe Bond Market and the Prospects of Its Formation in the Russian Federation. Financial Journal, 2021, vol. 13, no. 1, pp. 75–92
(In Russ.). DOI: 10.31107/2075-1990-2021-1-75-92.

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Elena V. Rozhentsova, Anastasiia D. Saltykova, Tatyana М. Devyatkova
Unallocated Metal Accounts in Russia: Determinants of Quoted Bid-Ask Spreads,
 p. 93-106
Abstract
Due to economic instability there has been an increase in demand for unallocated metal accounts offered by Russian commercial banks since April 2020. Although opening unallocated metal accounts gives banks an opportunity to expand the range of their products, diversify income, attract new clients and retain old ones, most Russian banks do not provide such services. For those, it is important to understand the determinants of bid-ask spreads (the difference between the quoted metal bid and ask prices), since the demand for unallocated metal accounts and the bank’s income from this service depend on the bid-ask spread. The purpose of this paper is to investigate the main determinants 
of quoted bid-ask spreads on unallocated metal accounts in commercial banks. Multiple regression models are applied for the period from October 2017 to May 2020. There are very few articles on the determinants of quoted bid-ask spreads on unallocated metal accounts; for this reason the paper is based on the results of studies of bid-ask spreads in other markets. Based on recent theoretical results, which indicate that bid-ask spreads depend on price volatility, we confirm this hypothesis on unallocated metal accounts. Moreover, we reveal that banks’ assets and the share of state participation influence bid-ask spreads on unallocated metal accounts in commercial banks. It is also proven that
bid-ask spreads for unallocated metal accounts in gold are, on average, lower than those for palladium, platinum and silver.
Keywords: unallocated metal account, bid-ask spread, price volatility, banking sector, gold market, precious metals market
JEL: G21, G12, G13
For citation: Rozhentsova E.V., Saltykova A.D., Devyatkova T.М. Unallocated Metal Accounts in Russia: Determinants of Quoted Bid-Ask Spreads. Financial Journal, 2021, vol. 13, no. 1, pp. 93–106 (In Russ.). DOI: 10.31107/2075-1990-2021-1-93-106.

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Tatyana G. Arbatskaya
Accounting and Analysis of Cash Flows of Penal Entities,
 p. 107-124
Abstract
The global economic crisis, exacerbated by the pandemic of the new coronavirus infection, has led to a significant deterioration in the financial state of most economic entities. This problem has also affected public sector entities receiving budget financing. Even if a given public sector entity is engaged in entrepreneurial activity, with a decrease in sales cash flow decreases, whereas accounts receivable and payable increase. To carry out their statutory activities, state entities of the penitentiary system in the Russian Federation use not only budgetary funds, but also funds received from the sale of products manufactured by convicts. Therefore, the interest of users in the cash flows of penitentiary institutions is steadily increasing. The above strengthens the information and analytical functions of cash flow statements. Unlike other forms of reporting, the cash flow statement should report cash flows during the period classified by operating and investing activities (financing activity is not typical for penitentiary entities). In addition, the statement of cash flows provides useful information not only for controlling the use of budget funds, but also for current and forecast analysis. The article investigates the theoretical principles of accounting of cash flows of public sector entities of the penitentiary system of the Russian Federation. Results of the study include a proposal to improve the form of the cash flow statement by including an analytical feature — the source of financing activities. The study also presents and tests a methodology for analyzing cash flows in the context of funding sources.
Keywords: cash flows, cash flow statement, presentation of a cash flow statement, financing, cash flow analysis
JEL: H61, H83
For citation: Arbatskaya T.G. Accounting and Analysis of Cash Flows of Penal Entities. Financial Journal, 2021, vol. 13, no. 1, pp. 107–124 (In Russ.). DOI: 10.31107/2075-1990-2021-1-107-124.

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Kristina V. Shvandar, Anastasia A. Anisimova
Approaches to Reforming Pension Systems in the World and Recommendations for Russia,
 p. 125-135
Abstract
Global trends in the pension sector show that a funded pension, in addition to a pay-as-you-go component, increases the reliability of pension protection for retired people and improves the stability of the pension system. The article analyzes the main directions of reforms of both distribution and funded components. The common features of the considered pension systems are the presence of several levels and their effective interaction as well as the expansion of the role of accumulative pension systems. Reforms related to increasing the population coverage with accumulative pension plans are among the most common ones in the framework of the analysis. The main directions for improving the Russian funded pension system are highlighted, among which the voluntary payment of contributions and the ability to set the desired amount of contributions are the main components of the proposed changes, based on the analysis of international experience in reforming pension systems.
Keywords: funded pension, mandatory funded pension plans, pension contributions, private pension funds, pension savings
JEL: H55, J26
For citation: Shvandar K.V., Anisimova A.A. Approaches to Reforming Pension Systems in the World and Recommendations for Russia. Financial Journal, 2021, vol. 13, no. 1, pp. 125–135 (In Russ.). DOI: 10.31107/2075-1990-2021-1-125-135.

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Financial Journal Vol.12 No.6 2020

CONTENTS

Kirill L. Astapov, Rasul А. Musaev, Anton A. Malakhov
Evaluating the Effectiveness of the Budget Expenditure Policy, p. 9-24
Abstract
The article discusses opportunities for improving fiscal policy in order to ensure macroeconomic stability and sustainable growth of the Russian economy. Budget expenditures have several key macroeconomic goals, the quality of which determines the effectiveness of budget spending policies. The authors developed a methodology that allows evaluating changes in the efficiency of budget expenditures based on a set of indicators. The estimates are based on the Russian Federation as the example, with special attention paid to the implementation of a balanced budget policy over the past decade. In Russia, significant progress has been made in ensuring macroeconomic stability through the introduction of flexible mechanisms for macroeconomic regulation (budget rules and floating exchange rates). However, when planning budget expenditures, additional attention should be paid to ensuring long-term economic growth and inclusive development, the structure of expenditures adjusted in accordance with these priorities. In the final part of the article, we consider changes in budget policy that have become a response to the crisis situation caused by the coronavirus pandemic. It is concluded that an increase in public debt may be appropriate in the current economic conditions in the event of a qualitative improvement in the budget spending policy.
Keywords: fiscal policy, fiscal stability, stabilization policy, long-term development, inclusive growth, fiscal stimulus, anti-crisis measures.
JEL: E61, E62, E63
For citation: Astapov K.L., Musaev R.А., Malakhov A.A. Evaluating the Effectiveness of the Budget Expenditure Policy. Financial Journal, 2020, vol. 12, no. 6, pp. 9–24 (In Russ.). DOI: 10.31107/2075-1990-2020-6-9-24.

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Vladimir V. Vagin, Irina V. Petrova
The Role of Public Participation in Ensuring the Efficiency of Budget Expenditures, p. 25-38
Abstract
The article is devoted to the relation between public participation and the effectiveness of budget expenditures. Studying the effectiveness of budget expenditures is one of the most relevant topics of public finance. At the same time, the question of whether civil participation has an impact on improving the efficiency of public spending is not often considered in the scientific literature. The authors analyze the development of the system of civil participation in the implementation of projects of state programs and national projects of the Russian Federation, and conclude that civil participation is important for improving the efficiency of budget expenditures. The results of citizens’ participation in the implementation of "Formation of a comfortable urban environment" federal project are chosen as the basis for the empirical analysis of this article. The authors attempt to determine the main approaches to forming indicators of the effectiveness of public participation in state programs and federal projects. The article also contains recommendations aimed at encouraging event organizers to engage citizens at the regional and local levels.
Keywords: civil participation, efficiency of budget expenditures, participatory budgeting, allocation efficiency, “Formation of a comfortable urban environment” federal project.
JEL: H72, H76, H79
For citation: Vagin V.V., Petrova I.V. The Role of Public Participation in Ensuring the Efficiency of Budget Expenditures. Financial Journal, 2020, vol. 12, no. 6, pp. 25–38 (In Russ.). DOI: 10.31107/2075-1990-2020-6-25-38.

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Boris I. Alekhin
Vertical Fiscal Imbalance and Regional Economic Growth, p. 39-53
Abstract
This study examines the impact of fiscal decentralization on regional economic growth using panel data for 82 subjects of the Russian Federation for the period 2005-2018. General theoretical framework was drawn from the second-generation theory of fiscal federalism, and panel data econometrics suggested the appropriate empirical model and estimation method. The pooled mean group method was used to estimate an autoregressive distributed lags model based on Solow-Swan theory of economic growth. The results indicate that vertical fiscal gap has a negative and significant long-term impact on regional economic growth while vertical fiscal imbalance has a positive and significant long-term effect. The study is consistent with the modern theory of fiscal federalism, W.E. Oates’ matching hypothesis and previous empirical work using Russian data. The study also found evidence of conditional convergence of regional economies.
Keywords: fiscal decentralization, regional economic growth, conditional convergence
JEL: E13, H71, H72, H77, C23
For citation: Alekhin B.I. Vertical Fiscal Imbalance and Regional Economic Growth. Financial Journal, 2020, vol. 12, no. 6, pp. 39–53 (In Russ.). DOI: 10.31107/2075-1990-2020-6-39-53.

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Igor Yu. Arlashkin
Intergovernmental Fiscal Instruments for Stimulating Regional Economic Growth in Russia, p. 54-68
Abstract
The article examines the instruments used in intergovernmental fiscal relations in order to promote economic growth of the regions of the Russian Federation. The task of stimulating regional economic growth is relevant in the need for the Strategy of Spatial Development of the Russian Federation until 2025 to be implemented. The article deals with various instruments of tax decentralization as well as three main types of fiscal transfers: “grants” (primarily equalization or balancing transfers), “subsidies” (earmarked co-funding transfers), and “other intergovernmental transfers” (other earmarked transfers). All these instruments are assessed from the standpoint of stimulating economic growth with special attention being paid to the tools used by regional governments to promote local economic growth. The article summarizes the results of the main econometric studies on the topic. As a result of the present study, it is shown that the main instruments for stimulating regional economic growth are earmarked transfers (primarily capital transfers) and decentralization of taxes on income (primarily corporate income tax). At the same time, since 2015 “other intergovernmental transfers” have been playing a more significant role in stimulating economic growth than “subsidies”, which is associated with an increase in the equalizing effect of the latter. Decentralization of property taxes has most likely not had a significant impact on regional economic growth, and the negative effect of equalizing transfers (“grants”) is smoothed out by special clauses built into the methodology for their distribution. 
Keywords: regional economic growth, tax decentralization, fiscal decentralization, intergovernmental relations, intergovernmental transfers, fiscal equalization, fiscal grants.
JEL: H71, H77
For citation: Arlashkin I.Yu. Intergovernmental Fiscal Instruments for Stimulating Regional Economic Growth in Russia. Financial Journal, 2020, vol. 12, no. 6, pp. 54–68 (In Russ.). DOI: 10.31107/2075-1990-2020-6-54-68.

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Аnna A. Mikhaylova, Evgeny N. Timushev
Creditworthiness of Russian Regions: What Needs to Be Considered, p. 69-86
Abstract
The paper explores the main factors that affect the creditworthiness of Russian regions. Knowledge of credit rating factors can help manage debt sustainability more effectively, implement a countercyclical policy, diversify debt instruments, and strengthen the fiscal sustainability of the Russian budgetary system. To determine the main factors, the credit ratings assigned by ACRA credit rating agency are analyzed. A set of economic and fiscal indicators is formed based on the analysis of press releases, the critical values are calculated, and their relationship with the current criteria of assessing the quality of regional financial management is analyzed. We found that fiscal indicators play the primary role in rating, but the institutional setting (for example, the amount of mandatory expenditures) is much less considered. The main factors of a credit rating are the share of tax and non-tax revenues in total revenues, the share of capital expenditures in total expenditures, and the amount of the regional debt. The approximate values of revenues and debt that are most likely to change a region's rating are calculated. The current criteria of the quality of regional financial management are valid due to the signs of their direct correlation to the credit rating and its factors.
Keywords: credit rating, debt sustainability, financial quality criteria, own revenues, capital expenditures, debt, ordinary least squares, multinomial logit regression.
JEL: H74, H77
Acknowledgements: The article has been prepared within the framework of the study "Theoretical foundations for assessing regions' budgetary sustainability and its application in the public administration system", carried out as part of the implementation of the 2020 RANEPA state task.
For citation: Mikhaylova A.A., Timushev E.N. Creditworthiness of Russian Regions: What Needs to Be Considered. Financial Journal, 2020, vol. 12, no. 6, pp. 69–86 (In Russ.). DOI: 10.31107/2075-1990-2020-6-69-86.

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Makar I. Kudelich
Financial Participation of Public Partners in Public-Private Partnership, p. 87-99
Abstract
This article attempts to identify and analyze the problems of forms of financial participation of public partners in PPP agreements, which may be solved by legislation improvement. The article presents a comparative analysis of Russian and international practice and legislation in the field of types and procedures for choosing forms of state financial participation in PPP projects. Conclusions are made about the absence of formal criteria for choosing the form of financial participation of a public partner in the PPP agreement and the rules for determining their volume, about the uncertainty and shortcomings of legislative regulation of “financial provision” in relation to a public partner, about the refusal from using the provision of debt financing and budget investments in share capital of project companies, on the establishment of high security budgetary requirements for regressive rights of the state in relation to the principal, which make the use of state (municipal) guarantees unclaimed in Russian practice of PPP projects.
Keywords: Public-Private Partnership, Public Partner, Budget, State Financial Participation, Financial Support, Subsidies, State and Municipal Guarantees.
JEL: L32
For citation: Kudelich M.I. Financial Participation of Public Partners in Public-Private Partnership. Financial Journal, 2020, vol. 12, no. 6, pp. 87–99 (In Russ.). DOI: 10.31107/2075-1990-2020-6-87-99.

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Viktor N. Ageyev, Andrey V. Vlasov
Potential Applications of Digital Financial Asets, p. 100-112
Abstract
The purpose of the article is to analyze the future state of legal issues connected to the use of digital assets after the adoption of the Federal Law “On digital financial assets, digital currency ...” in the Russian Federation. Results: The main areas of application are highlighted for digital financial assets in the form of shares on blockchain and digital bills of exchange. The authors conclude that the new Law introduces significant restrictions, but at the same time opens up certain opportunities for business development in operations with digital financial assets. It is seen that the terminology used in the Law does not always correspond to the concepts and standards established in international legal and business practice. Practical significance: Recommendations made in this article may be useful in practice for the exchange operator of digital financial assets, the operator of the information system, and other subjects working in the innovative infrastructure when planning activities in the field of regulation of the Law and in dealing directly with digital financial assets. To harmonize activities with digital financial assets, the legislator and the regulator, represented by the Bank of Russia, can also use the practice-oriented approaches described by the authors.
Keywords: digital financial assets, digital currency, digital rights, information system, distributed ledger, blockchain, cryptocurrency, digital financial assets exchange operator, digital bills of exchange
JEL: E59, F31, G23, K19, K22, K33
Acknowledgements: The authors thank the experts of Technical Committee № 159 “Hardware and software of distributed ledger and blockchain technologies” and the participants of the webinar “New law of the Russian Federation on digital financial assets and digital currency” for their comments and discussion of the provisions set out in this article.
For citation: Ageyev V.N., Vlasov A.V. Potential Applications of Digital Financial Asets. Financial Journal, 2020, vol. 12, no. 6, pp. 100–112 (In Russ.). DOI: 10.31107/2075-1990-2020-6-100-112.

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Olga V. Bogacheva, Oleg V. Smorodinov
Disbalance in Pay Structure of Employees in Federal Budgetary Institutions, p. 113-125
Abstract
Among other things, the introduction of new pay systems in Russian federal institutions (2008) resulted in rapid growth of the variable part of wages. In the early 2010s, in numerous institutions this figure exceeded 50 %, and it still remains at an unreasonably high level. It is known, from the history of labor relations, that violation of balance between fixed (salary) and variable parts of wages leads to a reduction in motivation levels of employees and, as a consequence, to deterioration in productivity indicators and labor quality. In OECD countries, at the legislative level, the concepts of base and full rates of pay are introduced, and the number and size of incentive and compensation payments are optimized. The rates of base pay are regularly reviewed, taking into account changes in consumer prices and the cost of living. This practice allows a reasonable balance to be maintained between fixed and variable parts of wages. At the level of institutions, competency standards are being developed that ensure optimal differentiation in the size of the fixed part of wages and minimize the possibility of making incentive payments to employees simply for the performance of their job duties. The purpose of the article is to develop proposals for solving the problem of imbalance in the structure of wages of employees at Russian federal institutions, based on modern foreign practice in this area.
Keywords: new pay systems, fixed and variable pay, base pay, incentive rewards, standards of professional competencies.
JEL: J30, J31, J38
For citation: Bogacheva O.V., Smorodinov O.V. Disbalance in Pay Structure of Employees in Federal Budgetary Institutions. Financial Journal, 2020, vol. 12, no. 6, pp. 113–125 (In Russ.). DOI: 10.31107/2075-1990-2020-6-113-125.

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Ekaterina A. Panova
The Role of Trade Credit in Activities of Small and Medium-Sized Enterprises, p. 126-135
Abstract
Trade credit has a special meaning for small and medium-sized enterprises (SMEs). When they act as a supplier, it allows them to increase sales and cash flows, and helps establish and maintain permanent relationships with clients. Deferred payment provision is a tool for non-price competition, giving a client time to make sure of product quality. Trade credit as a financial source is an important alternative to bank lending. The article is devoted to studying the determinants of accounts payable in Russian industrial SMEs. It is based on the financial indicators calculated using the SMEs’ accounting statements for the period 2010–2018, published by Rosstat. The statistical data analysis has led to the conclusion that accounts payable are the main borrowed financial source for Russian industrial SMEs. The results of the regression analysis demonstrate a direct dependence of the accounts payable amount on sales growth and a reverse dependence of the former on the liquidity both in small and medium enterprises. Small businesses are also characterized by a negative relationship between return on sales and the accounts payable amount.
Keywords: small and medium-sized enterprises (SMEs), trade credit, accounts payable, borrowed funds, capital structure, regression analysis.
JEL: G32, L14, L60
For citation: Panova E.A. The Role of Trade Credit in Activities of Small and Medium-Sized Enterprises. Financial Journal, 2020, vol. 12, no. 6, pp. 126–135 (In Russ.). DOI: 10.31107/2075-1990-2020-6-126-135.

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Financial Journal Vol.12 No.5 2020

CONTENTS

Interview with Director of the Financial Policy Department of the Ministry of Finance of Russia Ivan A. Chebeskov, p. 9-14

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Mariya A. Mihailova, Andrey V. Obynochny, Kristina V. Shvandar
Transformation of the Role of Financial Market Regulators: Statement of the Research Problem, p. 15-29
Abstract
Rapid socioeconomic development has produced a widening gap between economic theory and reality. As a result, it has become increasingly difficult to objectively assess whether financial regulatory policies adopted by nations worldwide are aligned with the fundamental objectives of stimulating financial market growth and promoting competition, and whether these policies are based on a realistic market picture. Such policy assessments have become particularly challenging for the payments industry and in regards to the regulation governing emergent financial market players from other industries (e.g. Big Tech). Coupled with the radical shift in the role of regulators themselves, this phenomenon raises a variety of scientific questions. Over the past few years, participants in the financial industry, primarily in the payment segment around the world, have, in practice, faced changes in the approaches of central (national) banks to market regulation. In our opinion, the key change lies in the new role that regulation is acquiring: now it not only reacts to market changes by setting a regulatory framework for them, but also becomes the central source and determining instrument of market changes. In this article, we substantiate an approach to the study of the directions of changes in the functions of macroregulation as a single mechanism in relation to a single object, in contrast to the studies available in the scientific literature within the framework of individual segments or infrastructures as well as the practice of regulation. The payment market used as an example is due to the fact that, by now, it is on this market that the changes studied manifest themselves to the greatest extent.
Keywords: regulation, central (national banks), instant payment systems, retail payments, financial market competition, price controls, technology, fintech, bigtech, market development, vehicles (agents) of change, innovation.
JEL: G15, G18, G21, G28
For citation: Mihailova M.A., Obynochny A.V., Shvander K.V. Transformation of the Role of Financial Market Regulators: Statement of the Research Problem. Financial Journal, 2020, vol. 12, no. 5, pp. 15–29 (In Russ.). DOI: 10.31107/2075-1990-2020-5-15-29.

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Anastasiya A. Anisimova
Opportunities and Prospects for Russia’s Transition to a Cashless Society, p. 30-42
Abstract
New digital technologies now allow contactless payments to be made both at retail outlets and at a great distance from them. Until recently, such features were only a new tool to provide convenience to customers. Now, with the COVID-19 pandemic, cashless payments have become a necessity all over the world. At the same time, there are objective obstacles to a complete transition to cashless payments. The article analyzes the barriers to the transition to a cashless society exemplified by the EU countries, and assesses the development of cashless payments in Russia. The main obstacles are security in making payments and the isolation of certain population groups from the economic and social life of society. Security issues concern not only the prevention of money theft, but also the prevention of failures in electronic payment systems. People who do not have bank accounts or do not know how to use electronic payment instruments may find themselves in economic and social isolation. This could clearly be seen during the pandemic, when the elderly needed the help of volunteers to purchase goods because they could not use the services of online stores. The article identifies trends in the development of non-cash payments in the EU and Russia, including the circumstances associated with COVID-19. The development of cashless payments depends on economic stability, and one can expect a decrease in consumer activity in the sphere of using non-cash banking services in Russia and other countries due to the world economic crisis in 2020.
Keywords: fnon-cash payments, ATMs, bank account, shadow economy, cashless society.
JEL: G20, G21, G23
For citation: Anisimova A.A. Opportunities and Prospects for Russia’s Transition to a Cashless Society. Financial Journal, 2020, vol. 12, no. 5, pp. 30–42 (In Russ.). DOI: 10.31107/2075-1990-2020-5-30-42.

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Victor L. Dostov, Pavel M. Shoust, Gleb V. Alekseev, Svetlana V. Krivoruchko
Approaches to Regulating E-Money Market in the Eurasian Economic Community: Comparative Analysis, p. 43-58
Abstract
The goal of this paper is to identify relevant (general and particular) elements of electronic money regulation in Russia, Kyrgyzstan, Kazakhstan, Belarus and Armenia. For the purposes of comparative analysis, the paper first introduces the methodology by outlining such factors as the legal status of electronic money issuers (including prudential requirements), differentiation of customer due diligence requirements in e-money systems, e-wallet usage rules, and division between the issuing and e-money transfer functionalities. Second, these factors are analyzed for each country, based on current regulatory acts. Finally, synthetic conclusions regarding major regional trends for regulation of e-money as a financial service are made. In most countries, e-money issuers are subject to licensing for the purposes of financial stability. Yet, approaches to differentiating functions of e-money actors vary across countries: in some of them, regulation recognizes “e-money operators” which transfer e-money but do not issue it. However, actual effects of this differentiation merits additional research. Almost all countries have implemented remote (simplified) identification which underlines the role of e-money as a “simplified” product aimed at financial inclusion. All countries except the Republic of Belarus and the Kyrgyz Republic still recognize non-personified electronic wallets. The research confirms that electronic money is still a specific instrument aimed at supporting financial inclusion and satisfying demand for instant cashless payments. More research is required to assess the actual effects of different regulatory approaches on the development of the e-money market.
Keywords: regulation of e-money, Eurasian Economic Community, types of identification, e-money issuers, agents for providing services in the e-money system, e-money operators, e-money institutions, e-wallets, prepaid cards.
JEL: G21, G23, G28
Acknowledgements: The paper has been prepared based on state-funded research carried out within a government task by the Financial University.
For citation: Dostov V.L., Shoust P.M., Alekseev G.V., Krivoruchko S.V. Approaches to Regulating E-Money Market in the Eurasian Economic Community: Comparative Analysis. Financial Journal, 2020, vol. 12, no. 5, pp. 43–58 (In Russ.). DOI: 10.31107/2075-1990-2020-5-43-58.

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Andrey V. Emelin, Boris G. Perov
Legal Issues of Identification in Remote Financial Services for Individuals, p. 59-74
Abstract
In connection with the introduction of a high alert and self-isolation regime in the Russian Federation due to the coronavirus pandemic, the issue of remote financial services for individuals, especially the remote opening of accounts, deposits and lending to new customers, is particularly relevant in the banking community. The aim of the article is to propose additional regulatory measures to those already introduced in order to improve the process of financial service provision to individuals in a remote format. The research method is the study of various acts of state bodies (normative acts and newsletters), including those adopted during the period of high alert, as well as surveys of National Council of Financial Market member financial organizations on the impact of measures taken on their activities concerning the provision of services to individuals as well as suggestions for improving them. The article includes an analysis of regulators’ most important decisions on the issue and an evaluation of their impact on the sphere regulated, along with a consideration of international regulating experience in remote identification procedures. Based on the results of the work, conclusions are drawn on the appropriateness and sufficiency of the regulatory measures taken to ensure remote financial services for individuals in conditions of self-isolation as well as on promising ways to further improve the current legislation in this area.
Keywords: financial services, account opening, lending, Bank of Russia, banking, legal regulation, remote identification, remote servicing, pandemic.
JEL: G20, G28
For citation: Emelin A.V., Perov B.G. Legal Issues of Identification in Remote Financial Services for Individuals. Financial Journal, 2020, vol. 12, no. 5, pp. 59–74 (In Russ.). DOI: 10.31107/2075-1990-2020-5-59-74.

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Alexey V. Maslov, Yulia A. Maklakova
Merchant Acquiring Technology and Problems of Its Regulation in Russia, p. 75-85
Abstract
This paper examines the evolution of merchant acquiring in Russia. Initially, the term was purely professional and meant the involvement of “service points” in accepting cards. Today it denotes the whole range of business for the creation and development of the infrastructure of non-cash settlement and cash services in trade and service enterprises using payment cards. Technological innovation has spurred the development of acquiring tools. However, today, when the number of non-cash transactions is steadily growing and has almost reached the number of transactions using cash, the issue of acquiring fees is still a burning issue between retail and banks. The authors consider the positions of the two parties to the dispute, and also draw conclusions about the possible consequences if the requirements of retail or banks are satisfied.
Keywords: acquiring, acquiring fees, infrastructure of non-cash settlement and cash services, plastic cards, non-cash payment.
JEL: G21, G23
For citation: Maslov A.V., Maklakova Yu.A. Merchant Acquiring Technology and Problems of Its Regulation in Russia. Financial Journal, 2020, vol. 12, no. 5, pp. 75–85 (In Russ.). DOI: 10.31107/2075-1990-2020-5-75-85.

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Pavel A. Samiev, Veronika R. Zakirova, Darya V. Shvandar
Ecosystems and Marketplaces: Overview of the Financial Services Market, p. 86-98
Abstract
The relevance of the research subject is due to global trends in financial market digitalization and new challenges of our time. The spread of globalization processes to the activities of financial organizations determines the trends in digital development of interaction with customers — in particular, growth of consumer demand for remote services in the context of a pandemic stimulates the formation of new financial and digital platforms. The article provides an analytical overview of trends in, obstacles to and prospects for the integration of financial ecosystems and marketplaces in the Russian market. The main conclusions of the work boil down to the need to apply an integrated approach when developing the rules for the functioning of financial and digital ecosystems and marketplaces, taking into account the intersectoral nature of interaction. Regulation will provide a legal framework and help to maintain competition in the market.
Keywords: financial and digital platforms, marketplace, financial ecosystem, structural transformation, end-to-end digital system.
JEL: G21, G22, G28
For citation: Samiev P.A., Zakirova V.R., Shvandar D.V. Ecosystems and Marketplaces: Overview of the Financial Services Market. Financial Journal, 2020, vol. 12, no. 5, pp. 86–98 (In Russ.). DOI: 10.31107/2075-1990-2020-5-86-98.

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Alexander D. Andryakov, Evgeniy A. Dombrovskiy
Fiscal Measures to Boost the Economic Development of Russian Territories, p. 99-113
Abstract
Two possible directions of fiscal measures aimed at improving Russian territories’ economic development are discussed in the paper: one at the level of largest agglomerations and another one at the regional level. It is widely accepted that agglomerations are “engines” of economic growth. The Strategy of Spatial Development of the Russian Federation until 2025 pays special attention to the development of agglomerations. However, the latter process has not only natural limitations, but also institutional ones arising from low fiscal independence of municipalities which form agglomerations. To overcome the institutional limitations, the paper proposes a set of fiscal measures, including a redistribution of tax revenues and expenditure obligations between the center of a given agglomeration and the region that contains it. The current fiscal mechanisms of stimulating economic development of Russian regions are analyzed. A mechanism of additional stimulation for regions to develop their own revenue base is proposed; it includes the transfer of receipts of VAT levied with a reduced rate of 10 % to regions in exchange for centralization of some part of corporate income tax in the federal budget. Different scenarios of this exchange are analyzed. It is shown that centralization of the corporate income tax amount corresponding to the 1 % rate in the federal budget in exchange for the transfer of VAT levied with a rate of 10 % to regions with a compensation mechanism within the transferred amounts is neutral to the federal budget and to budgets of the regions which receive equalization grants.
Keywords: agglomerations, fiscal equalization, regions, regional income, stimulation, intergovernmental fiscal relations, intergovernmental grants, VAT, corporate income tax.
JEL: H71, H72, H74
For citation: Andryakov A.D., Dombrovskiy E.A. Fiscal Measures to Boost the Economic Development of Russian Territories. Financial Journal, 2020, vol. 12, no. 5, pp. 99–113 (In Russ.). DOI: 10.31107/2075-1990-2020-5-99-113.

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Boris I. Alekhin
Regional Tax Autonomy and Budget Balances, p. 114-127
Abstract
The purpose of this study is to test the proposition that better regional fiscal balances are associated with stronger regional tax autonomy as measured by the ratio of property taxes to expenditures. The study uses panel data for 82 subjects of the Russian Federation over 14 years (2005–2018). A two-step dynamic model of budget balance is estimated by the “system” generalized method of moments. A positive and statistically significant association between fiscal balances and tax autonomy is established. This study emphasizes the importance of regional tax autonomy for the development of market-preserving fiscal federalism in Russia.
Keywords: property tax, tax autonomy, sub-national government, fiscal imbalance.
JEL: H62, H71, H77, E62
For citation: Alekhin B.I. Regional Tax Autonomy and Budget Balances. Financial Journal, 2020, vol. 12, no. 5, pp. 114–127 (In Russ.). DOI: 10.31107/2075-1990-2020-5-114-127.

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Financial Journal Vol.12 No.4 2020

CONTENTS

Zhanna A. Mingaleva
Institutional Features of International Financing for Climate Change Adaptation Programs, p. 10-25
Abstract
The article is devoted to analyzing the main institutional mechanisms of the process of financing the programs for the least developed countries’ adaptation to negative climate change, implemented within the UN Framework Convention on Climate Change (UNFCCC). The paper presents the results of the analysis of basic institutions designed to support the financing processes for sustainable development and adaptation to negative climate changes developed at the international level. The analysis covers two stages of creating and developing a system of financial institutions for international support: the Kyoto Protocol and the Paris Agreement. The reasons behind the need for further transformation of institutional mechanisms for financing adaptation programs are identified. As a result of the study, it is concluded that the key obstacles to the successful implementation of financial adaptation mechanisms are their weak institutional basis and the presence of conflicts in international documents on climate regulation and sustainable development. Based on the institutional analysis, it is shown that the institutions that form the core of international financing mechanisms are characterized by internal and external contradictions and have low implementability as well as low attractiveness for investors. It is concluded that limited access to financial capital is one of the key reasons for the slow resolution of the problem of combating environmental pollution and negative climate change as well as achieving the corresponding goal of sustainable development.
Keywords: financial mechanisms, adaptation programs, climate change, institutions, UN Framework Convention on Climate Change, Adaptation Fund.
JEL: Q54, Q56, Q58, Q52
For citation: Mingaleva Zh.A. Institutional Features of International Financing for Climate Change Adaptation Programs. Financial Journal, 2020, vol. 12, no. 4, pp. 10–25 (In Russ.). DOI: 10.31107/2075- 1990-2020-3-10-25.

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Igor A. Yakovlev, Lyudmila S. Kabir, Svetlana I. Nikulina 
Climate Policy of the Russian Federation: International Cooperation and National Approach, p. 26-36
Abstract
The article gains an insight into the key provisions of Russia’s climate policy and the main stages of its formation. The relevance of the research topic is determined by the need to develop an effective national strategy to reduce climate risks for Russia’s sustainable social and economic development. The article is aimed at shaping a well-grounded understanding of the current state of the national climate policy. It describes the current climate regime of the United Nations, resulting from longstanding international cooperation. The article analyses Russia’s approach to the formation of climate policy on the basis of the national legal framework to combat climate change and adapt to its consequences, and identifies the key problems affecting the formation of the national climate policy. As a result of the research the authors have come to the following conclusions. The climate policy of the Russian Federation is developing in accordance with the global concept. However, the key issues of climate policy have not yet been fully integrated into the national social and economic policy. The current stage in the development of Russian climate policy suggests that the process of its formation should move to a new quality level in the short run.
Keywords: climate change, climate change adaptation, international agreements, national policy, climate policy, Framework Convention on Climate Change, Kyoto Protocol, Paris Agreement.
JEL: F64, O44, Q58
For citation: Yakovlev I.A., Kabir L.S., Nikulina S.I. Climate Policy of the Russian Federation: International Cooperation and National Approach. Financial Journal, 2020, vol. 12, no. 4, pp. 26–36 (In Russ.). DOI: 10.31107/2075-1990-2020-4-26-36.

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Elena P. Fedorova 
Role of the State in the Resolution of Green Finance Development Issues, p. 37-51
Abstract
Problems related to green finance exist in all the countries of the world. Those problems are especially acute in the developing countries, whose economic growth depends on recovery of hydrocarbon fossil fuels. To research the history of issues related to green finance and identify the key reasons hampering its development, this article presents a systematic literature review; it applies a systematic analytical approach to researching green finance. The paper considers the key notions and the world expertise gained in the resolution of problems related to green finance; it also presents a statistical analysis of data provided by websites of international institutions and financial organizations. This article analyzes a number of problems that are unique for green finance: disagreement in interpreting the concepts of “green finance” and “green economy sectors”; difficulties related to assessment and evaluation of the external effect exerted by green finance; institutional reasons hampering the development of green finance; information asymmetry; and problems related to estimation of credit and market risks. The paper considers innovations in the financial sector that are typical for long-term investment, such as green bonds, asset-backed security, and yield cos. As a result, the article concludes that cooperation between the government, international institutions, and business companies is necessary to resolve the issues of green finance. The government ought to play the key role in that cooperation — it must inform, coordinate, stimulate, and control activities related to green finance.
Keywords: sustainable development, economic growth, green economy, green finance, green investment, green bond.
JEL: O44, Q32
For citation: Fedorova E.P. Role of the State in the Resolution of Green Finance Development Issues. Financial Journal, 2020, vol. 12, no. 4, pp. 37–51 (In Russ.). DOI: 10.31107/2075-1990-2020-4- 37-51.

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Svetlana V. Doroshenko, Anna D. Mingaleva 
Carbon Exchanges: European Experience in Developing the Mechanism of Emission Permit Trading, p. 52-68
Abstract
The system for trading permits for greenhouse gas emissions is currently being presented as one of the most promising mechanisms for influencing climate problems. However, the regulatory function of this mechanism is not as positively unambiguous as it is represented by international organizations, and its creation, operation and distribution on a global scale are facing many obstacles. The article presents the main results of a study on the process of creating and developing a system for trading in permits for CO2 emissions, implemented in the EU for more than 15 years. In order to identify problems in the functioning of the mechanism for trade in permits for CO2 emissions, a phased analysis of development within the EU has been carried out, and the main institutional obstacles in the existing mechanism have been detected. The analysis of the features of its application is then performed, the strengths and weaknesses of the functioning are determined, and the development prospects are assessed. As a result of the study, it is concluded that, due to the presence of objective contradictions and shortcomings in the existing mechanism for trading permits for CO2 emissions, its validity in its current form does not allow one to achieve the results on reducing emissions and pollution recorded in the UN and EU planning documents on environmental regulation. The main obstacle is the inability to reach, in modern conditions, coordination of the interests of many stakeholders in reducing emissions, which provokes the effect of “carbon leakage”.
Keywords: trading permits for CO2 emissions, EU ETS, carbon exchanges, regulating one-sidedness, carbon leakage, quotas, greenhouse effect.
JEL: Q52, Q54, Q56, Q58
For citation: Doroshenko S.V., Mingaleva A.D. Carbon Exchanges: European Experience in Developing the Mechanism of Emission Permit Trading. Financial Journal, 2020, vol. 12, no. 4, pp. 52–68 (In Russ.). DOI: 10.31107/2075-1990-2020-4-52-68.

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Vladislav N. Rutskiy, Maria V. Osipenko 
Green Economy as a Labor Productivity Factor in the Manufacturing Industry of European Union Countries, p. 69-84
Abstract
These days many countries declare saving natural resources and reducing anthropogenic pressure on the environment as being among their national priorities. They place importance on sustainable development and the transition to a green economy model. However, the problem of assessing the effectiveness of the green economy and the competitiveness of related technologies is still open to debate. The paper examines approaches to measuring the green economy and presents an empirical analysis of the relationship between labor productivity in the manufacturing industry and green economy factors for a number of European Union countries, characterized by high performance in the global rankings of the green economy. Studying approaches to the identification and measurement of the green economy, the authors identify trends in the realization of a new environmentally sustainable development model in the countries of the European Union and the dynamics of key indicators of the green economy. The paper develops an empirical correlation and regression model that defines, along with other factors, the influence of green economy factors on labor productivity in manufacturing. An assessment of the model specification based on panel data from the manufacturing industries of seven European countries shows a significant positive effect of investment in equipment and plant for pollution control on labor productivity in the industry. The results indicate the relevance of further studies, in particular, the possible attractiveness of private investment in the formation of a green economy in various sectors of the economy in both developed and developing countries.
Keywords: green economy, labor productivity, sustainable development, government support, invest- ments in green technology, empirical model, industrial data.
JEL: O44, Q56, C33
For citation: Rutskiy V.N., Osipenko M.V. Green Economy as a Labor Productivity Factor in the Manufacturing Industry of European Union Countries. Financial Journal, 2020, vol. 12, no. 4, pp. 69–84 (In Russ.). DOI: 10.31107/2075-1990-2020-4-69-84.

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Irina P. Dovbiy, Alexey N. Degterenko, Vlada V. Kobilyakova
“New Industrialization” in Russia as a Factor in the Transition to a Green Economy, p. 85-100
Abstract
The present study reveals the conditions and factors of “new industrialization” in the context of the growing need for Russia to transition to a new, green model of economic growth. It can be assumed that the consequences of the global structural crisis caused by COVID-19 will raise the requirements of environmental standards. The latter can become a powerful tool in the competition between companies and states for resource and sales markets. In Russia, “new industrialization” should become the basis for the greening of the economy, since there are certain prerequisites for this. The authors have investigated various factors, conditions, trends, requirements and features that the new industrialization must meet in order to ensure sustainable development and competitiveness in global markets. In the theoretical aspect, the authors have made a reasoned conclusion about the dialectical unity of the processes of “new industrialization” and greening of the economy. If certain conditions are met – in particular, priority development of the real sector of the economy on the latest technological basis, formation of a new technocratic elite with competencies for the intellectual provision of the “new industrialization” policy, and building up of the intellectual potential of scientists, engineers and technicians pursuing new scientific directions and development of competitive technologies — it will be possible to say that “new industrialization” is a factor of transition to expanded green reproduction of the national economy.
Keywords: “new industrialization”, best available techniques, sustainable development, green economy, COVID-19, global structural crisis.
JEL: D02, O14, O44
For citation: Dovbiy I.P., Degterenko A.N., Kobilyakova V.V. “New Industrialization” in Russia as a Factor in the Transition to a Green Economy. Financial Journal, 2020, vol. 12, no. 4, pp. 85–100 (In Russ.). DOI: 10.31107/2075-1990-2020-4-85-100.

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Irina I. Prosvirina, Natalya S. Dovbiy 
Selection of Sources of Traditional and Green Financing for the Best Available Techniques, p. 101-116
Abstract
Russia has been gradually expanding the principles of green development in the national economy. The article examines the state of methodological and institutional support for green investments, and analyzes the problems that hinder the financing of the best available techniques. The leading role of the state in eliminating institutional gaps between the individual interests of investors and the collective problems of society is established. The authors have investigated various criteria for selecting sources of financing and concluded that it is appropriate to develop green lending relationships in Russia, taking into account regulatory restrictions and ESG risks. In the theoretical (methodological) aspect, the authors have identified specific features of green financing as a trinity of elements: “Object– Subject–Institutional Environment”; each of the features must meet the principles of green financing. The necessity of further formation of the institutional environment for green financing is justified. In practical terms, statistical data-based modeling has been carried out for entities from a list of 300 polluting enterprises that need to update their fixed assets based on the best available techniques. This study has provided answers to the questions of what factors influence the growth of non-current assets, including factors related to the sources of their financing. It is determined that first of all enterprises solve the problem of current management and working capital adequacy, and only then begin to direct financial resources to updating the fixed capital. Based on the results obtained, the main problems are formed and the main tasks of the nearest development of green development principles in the Russian economy are shown. When writing the article, the authors used modern methods of systemic and statistical analysis as well as economic and mathematical modeling.
Keywords: best available techniques (BAT), financing the “new industrialization”, sources of green finance, green investments, sustainable development.
JEL: D02, O14, O44
For citation: Prosvirina I.I., Dovbiy N.S. Selection of Sources of Traditional and Green Financing for the Best Available Techniques. Financial Journal, 2020, vol. 12, no. 4, pp. 101–116 (In Russ.). DOI: 10.31107/2075-1990-2020-4-101-116.

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Ekaterina O. Vostrikova, Anna P. Meshkova
ESG Criteria in Investment: Foreign and Russian Experience, p. 117-129
Abstract
The evolution of financial instruments improves investment decision-making. Modern society requires additional information about companies' activities: standard financial statements and financial indicators no longer satisfy its needs. Environmental degradation, global warming, and the fight against poverty amid growing prosperity in developed countries — all these factors promote the development of new financial instruments and criteria. ESG provides the answer to these modern demands and can help evaluate companies' activities related to investment in sustainable development. Moreover, the application of these criteria enables companies to reduce risks and to create reputation, and helps investment funds make quality investment decisions. This trend, which has emerged and strengthened in developed foreign countries over the past 50 years, is penetrating emerging markets as well.
This article investigates the role of ESG criteria in making investment decisions based on foreign experience. The leaders in socially responsible investment are the economies of developed countries: the USA, Canada, Great Britain, Germany, and Australia. As Russian companies seek international financing, they will have to compete for investors in foreign financial markets on their terms. Therefore, it makes sense to focus on following ESG criteria in their activities right now. Currently, there are a number of barriers to the implementation of ESG criteria in Russia: lack of understanding of the importance of socially responsible investments, lack of state standards in the disclosure of non-financial information, lack of large domestic investors (lack of competition on the pension insurance market as well), and the focus of Russian companies only on medium-term profits.
Keywords: socially responsible investment, ESG criteria, green investment, investment funds, risk, sustainable investment.
JEL: G11
For citation: Vostrikova E.O., Meshkova A.P. ESG Criteria in Investment: Foreign and Russian Experience. Financial Journal, 2020, vol. 12, no. 4, pp. 117–129 (In Russ.). DOI: 10.31107/2075-1990-2020-4- 117-129.

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ISSN 2658-5332