Financial instability in the region: assessment methods and elimination tools

Financial instability is one of the most important factors in the level and sustainability of socio-economic development of territories. However, at present, from the viewpoint of methodology, this concept is developed insufficiently in relation to the elimination and forecasting of economic and financial crisis threats. This problem is especially acute at the regional level. For its solution the article proposes a methodology for assessing the risks of financial instability; it helps to determine the indicators of the current state and development of regional finances that are most liable to volatility in the context of the main institutional sectors (government, business, households); the methodology also helps to forecast the probable maximum change in the indicators in the future with the use of the VaR methodology The calculations carried out according to the proposed methodology on the example of the Republic of Bashkortostan show that regional finances are most vulnerable to fiscal risk. As a tool to eliminate budget risk the authors give several suggestions on improving the efficiency of interbudgetary transfers that make it possible to increase the degree of financial autonomy of the regions and to act as an effective incentive to their innovation developmen