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Financial Crisis, Economic Recovery and Banking Development in Russia, Ukraine, and Other FSU Countries

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Author Info

  • Dalia Marin
  • Haizhou Huang
  • Chenggang Xu

Abstract

This paper provides a unified analysis for the onset of the 1998 financial crisis and the strong economic recovery afterward in Russia and other former Soviet Union countries. Before the crisis a banking failure arose owing to the coexistence of a lemons credit market and high government borrowing. In a lemons credit market low credit risk firms switched from bank to nonbank finance, including trade credits and barter trade, generating an externality on banks'' interest rates. The collapse of the treasury bills market in the financial crisis triggered a change in banks'' lending behavior, providing initial conditions for banking development.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/105.

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Length: 37
Date of creation: 01 Jun 2004
Date of revision:
Handle: RePEc:imf:imfwpa:04/105

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Related research

Keywords: Former Soviet Union; Economic models; banking; information asymmetry; bank lending; banking sector; commercial banks; bank loans; bank debt; bank credit; tax revenue; trade credit; direct investment; foreign direct investment; bank intermediation; bank loan; banking reform; investors; bank-firm relationship; rate of return; bank lending rates; risk assessment; banking activities; foreign investors; bank competition; outstanding debt; banking sector development; risk premium; bank finance; taxable income; excess liquidity; bank reform; bank owners; expropriation; bank lending behavior; bank loan rates; foreign currency; fixed assets; bank financing; macroeconomic stabilization; bank credits;

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References

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  1. Prakash Loungani & Paolo Mauro, 2000. "Capital Flight from Russia," IMF Policy Discussion Papers 00/6, International Monetary Fund.
  2. Perotti, Enrico, 2002. "Lessons from the Russian Meltdown: The Economics of Soft Legal Constraints," International Finance, Wiley Blackwell, Wiley Blackwell, vol. 5(3), pages 359-99, Winter.
  3. Blanchard, Olivier & Kremer, Michael R., 1997. "Disorganization," Scholarly Articles 3659691, Harvard University Department of Economics.
  4. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 84(3), pages 488-500, August.
  5. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, American Economic Association, vol. 89(3), pages 473-500, June.
  6. Erik Berglof & Patrick Bolton, 2001. "The Great Divide and Beyond: Financial Architecture in Transition," William Davidson Institute Working Papers Series 414, William Davidson Institute at the University of Michigan.
  7. Guillermo Calvo & Fabrizio Coricelli, 1992. "Output Collapse in Eastern Europe," IMF Working Papers 92/64, International Monetary Fund.
  8. Marin, Dalia & Schnitzer, Monika, 2005. "Disorganization and financial collapse," Munich Reprints in Economics, University of Munich, Department of Economics 19258, University of Munich, Department of Economics.
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Citations

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Cited by:
  1. Aitor Erce, 2012. "Selective sovereign defaults," Globalization and Monetary Policy Institute Working Paper, Federal Reserve Bank of Dallas 127, Federal Reserve Bank of Dallas.
  2. Marin, Dalia, 2004. "The Vanishing Barter Economy in Russia: A Test of the Virtual Economy Hypothesis? Reply to Barry Ickes," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 83, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  3. Herz, Bernhard & Bauer, Christian & Karb, Volker, 2006. "Are twin currency and debt crises special?," Proceedings of the German Development Economics Conference, Berlin 2006, Verein für Socialpolitik, Research Committee Development Economics 11, Verein für Socialpolitik, Research Committee Development Economics.
  4. Aitor Erce Domiguez, 2010. "Debtor Discrimination During Sovereign Debt Restructurings," 2010 Meeting Papers, Society for Economic Dynamics 1324, Society for Economic Dynamics.
  5. Bauer, Christian & Herz, Bernhard & Karb, Volker, 2006. "How likely are macroeconomic crises in the CIS?," Research in International Business and Finance, Elsevier, Elsevier, vol. 20(2), pages 227-238, June.

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