Financial sector

The Moscow City business district is the largest concentration of corporate headquarters in the Russian financial sector

The financial sector ( Eng. Financial sector ) or the sector of financial corporations ( Eng. Financial corporations sector ) - all resident corporations, including quasi-corporations, whose main function is to provide financial services , including insurance and pensions , to other institutional units ^[1] .

The financial sector differs from the non-financial sector due to the fact that financial corporations are mainly engaged in the provision of financial services, including financial intermediation , which are significantly different from other types of production activities . Financial intermediation can be defined as a type of activity in which an institutional unit accumulates financial resources by accepting financial obligations at its own expense in order to channel borrowed funds to other institutional units by lending or otherwise acquiring financial assets . Distinctive features of financial intermediation are ^[1] :

• formation of financial obligations for subsequent lending;
• transformation of financial instruments by maturity, interest rate, currency, par value and other characteristics;
• assuming financial risks.

Among the key features of a financial corporation are separate accounting of financial activities, financial risk management , the predominance of financial services in the aggregate production of goods and services of an institutional unit.

According to the IMF classification, the financial sector includes ^[1] :

• deposit corporations
  • central bank
  • other depository corporations ( banks )
  • money market funds
• other financial corporations,
  • investment funds (except money market funds),
  • other financial intermediaries (except for insurers and pension funds),
  • auxiliary financial institutions,
  • captive financial institutions and lenders,
  • insurance companies
  • pension funds .

In Russia, the financial sector includes institutional units that are supervised organizations of the mega - regulator represented by the Bank of Russia ^[2] :

• credit organizations;
  • banking credit organizations;
    • universal licensed banks;
    • banks with a basic license;
  • non-bank credit organizations;
• non-credit financial organizations;
  • professional securities market participants;
  • managing companies of an investment fund, unit investment fund and non-state pension fund;
  • specialized depositories of the investment fund, unit investment fund and non-state pension fund;
  • joint-stock investment funds;
  • clearing organizations;
  • central counterparties ;
  • trade organizers;
  • central depository;
  • repository
  • Insurance companies;
  • non-state pension funds;
  • microfinance organizations;
  • credit consumer cooperatives;
  • housing funded cooperatives;
  • credit bureau;
  • actuaries;
  • credit rating agencies;
  • agricultural credit consumer cooperatives;
  • pawnshops.

The financial services sector, but not formally part of the financial sector, is considered a “shadow” (parallel) banking system . The largest subsector of the shadow banking system is unregulated investment funds, which include money market funds and other investment funds (state and private funds). The second largest shadow system is the financial companies subsector ^[3] . Due to differences in legislation, each jurisdiction independently determines the composition of the financial companies subsector. In particular, in Argentina these include leasing and factoring companies, as well as non-bank credit card issuers, in Brazil - leasing and microfinance companies, mortgage lending companies, non-bank credit card issuers, etc. ^[4] In Russia, among the largest unregulated financial markets are leasing and factoring markets ^[5] .