"Loans for Shares" Revisited
AbstractThe "loans for shares" scheme of 1995-6—in which a handful of well-connected businessmen bought stakes in major Russian companies—is widely considered a scandal that slowed subsequent Russian economic growth. Fifteen years later, I reexamine the details of the program. In light of evidence available today, I concur with the critics that the scheme’s execution appeared corrupt. However, in most other regards the conventional wisdom was wrong. The stakes involved represented a small fraction of the market; the pricing in most cases was in line with international practice; and the scheme can only explain a small part of Russia's increasing wealth inequality. The biggest beneficiaries were not the so-called "oligarchs," but Soviet era industrial managers. After the oligarchs consolidated control, their firms performed far better than comparable state enterprises and companies sold to incumbent managers, and helped fuel Russia’s rapid growth after 1999.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15819.
Date of creation: Mar 2010
Date of revision:
Publication status: published as “ ‘ Loans for Shares ’ Revisited,” Post - Soviet Affairs , 26, 3, July - September 2010, 207 - 27.
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
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Find related papers by JEL classification:
- H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property
- P2 - Economic Systems - - Socialist Systems and Transition Economies
- P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
- P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
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