MARKET CONDITIONS NON-BANK FINANCIAL SERVICES AUTONOMOUS REPUBLIC OF CRIMEA IN THE NEWEST OPERATING CONDITIONSJournal: Academic Bulletin "Economics and Region" (Vol.5, No. 48)
Publication Date: 2014-11-26
Assessment of functioning of the regional markets of non-banking financial services in Ukraine acquires a particular relevance because regions become a system-forming factor in the economic growth of the state. Particular attention should be paid to the regions that have been forcibly taken away from Ukraine contrary to the norms of the international law. At present, it is important to determine what changes have taken place in this market for the year being under another jurisdiction. New conditions, in which people of the Autonomous Republic of Crimea find themselves, including Sevastopol city and entities, significantly affect further development of non-banking financial market of the peninsula. In the beginning of 2014, at the State Register of Financial Institutions of Ukraine, 43 financial institutions and 323 their subdivisions were registered in the Crimea. At the territory of ARC, there came into being dualism of regulatory and legal support of financial and credit institutions’ activity: on the one hand, legislation of Ukraine is extended to all the participants; on the other hand, legislation of the Russian Federation is forcibly implemented for all the market participants. Taking into consideration the new challenges of functioning of non-banking financial market institutions in ARC and Sevastopol City, and in order to protect the interests of financial services for consumers, to prevent violation of the Ukrainian legislation, which regulates the activity of financial services providing, by financial institutions and/or separate units of financial institutions located and/or operating in this area, the State Commission for Regulation of Financial Services Markets decided to terminate operation of non-banking financial institutions on the peninsula. The opportunity was given to financial institutions and their structural units to change their location for mainland Ukraine. If they do not change their location, the financial institution should contact State Commission for Regulation of Financial Services Markets by a statement to exclude information about the financial institution and/or its separated unit from the State Register of financial institutions in connection with the termination of financial services provision and request for license revocation. As a result of the annexation, the non-banking financial services market of the Crimea peninsula has undergone catastrophic changes, manifested through the termination of any and all national financial institutions operation and the need for licensing of new ones according to the current legislation of the Russian Federation. Due to the fact that in 2014 all national banking and non-banking financial institutions left the peninsula, and during this short enough time only Russian insurance companies and banks began operate on the peninsula, the financial market is characterized by a total reduction of provided services. Proof of the market’s catastrophic narrowing is the reduction of collected premiums amount in 2014 by 98.4% in comparison with the previous year, while due to the impossibility of rapid adaptation to the new realities on the peninsula, no pawn shops, credit unions and finance companies exist. Even functioning of currency exchange offices was stopped. In fact, currently the only financial institutions on the peninsula are insurers and banking institutions, which indicates the limited consumers' access to non-banking financial services. Further research should be directed at assessment of the state regulation mechanism of the existing financial institutions operating in ARC and Sevastopol City.
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