Legal Regulation of the Syndicated Lending: Banking Innovations in Contemporary Russia

Abstract

Purpose – A very urgent need to create a suitable legal regulation system of innovative banking activity under the conditions of the new national economy’s formation.

Design/Methodology/Approach – In terms of the legal research of the banking innovative entrepreneurial activity the authors designate actions aimed at creating a new or developed banking product, at developing and adjusting the ways of the banks’ entrepreneurial activity efficiency increase, which are oriented at achieving the economic and strategic effect during banking operations and transactions. The authors substantiate the significant place of the syndicated lending in the list of such actions. The article explores the advantages and disadvantages of the syndicated lending, the demand for this innovative banking product and its application area.

The authors research the legal nature of the syndicated loan for the presence or absence of plurality of persons in obligation and for the agreement concluded between the syndicate members. The authors also explore the problem of slow development of the syndicated lending of the economic entities in Russian Federation. The authors note that this financial technology is successfully implied abroad for a long time, while in the Russian Federation the syndicated lending is considered as an innovative banking product.

Findings – The authors come to the conclusion that this situation is caused by the lack of the detailed legal regulation of this area of business relations and also by the poor development of the mutual credit partnership between commercial banks.

Originality/Value – The authors reveal the legal regulation loopholes, elimination of which will promote the syndicated lending of local debtors and, as a result, the growth of the national economy real sector in general.