The role of bank loans in economic growth of troubled regions
Subject. The article formulates certain hypotheses that enable to embark on a path of sustainable economic growth in a troubled region through intensification of bank lending to private sector of the economy. Objectives. The purpose is to provide a scientific rationale for and systematize drivers of bank lending to enterprises operating in the real sector of troubled (depressed) regions, taking into account associated costs and risks. Methods. We employ methods of systems, economic, and statistical analysis, classification, comparison, and expert assessments. Statistical and analytical data for the Russian Federation and for the Tyva Republic serve as a basis of the study. Results. We tested the hypothesis about existence of nonlinear relationship between the degree of financial sector development and the rate of economic growth in the region with underdeveloped financial market. The paper unveils a substantial impact of bank lending expansion on industrial performance in the subsidized region, identifies the main trends in bank lending in the Tyva Republic, analyzes key indicators of financial condition of enterprises, and highlights negative factors that impede effective participation of commercial banks in the development of investment activities of local enterprises. Conclusions. It it necessary to achieve a closer integration of financial and real sectors, which is possible if there is a State regional policy geared towards encouraging credit institutions to provide investment resources to enterprises.