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Investment in Young and Established Microenterprises in Russia

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  • Hartarska, Valentina M.
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    Abstract

    This paper shows that imperfections in the credit market and insecurity of property rights affect nonuniformly the investment of younger and established microenterprises in Russia. The empirical analysis of investment is based on the liquidity constraint model but also accounts for the added challenged that the weak institutional structure and the small size of the enterprises pose. Investment in younger firms is most constrained by the availability of funds, while investment in more established microenterprises is affected by the ability of the entrepreneurs to "secure" their property rights by paying bribes. Financial institutions are unable to distinguish good from bad borrowers but lend to firms that have transparent transactions.

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    File URL: http://purl.umn.edu/24857
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    Paper provided by European Association of Agricultural Economists in its series 2002 International Congress, August 28-31, 2002, Zaragoza, Spain with number 24857.

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    Date of creation: 2002
    Handle: RePEc:ags:eaae02:24857
    Contact details of provider: Web page: http://www.eaae.org
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    Keywords: Agricultural Finance;

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    1. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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    9. Anderson, Ronald & Kegels, Chantal, 1997. "Finance and Investment in Transition : Czech Enterprises, 1993-1994," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1997015, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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    12. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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    14. Ronald Anderson and Chantal Kegels & Ronald Anderson and Chantal Kegels, 1997. "Finance and Investment in Transition: Czech Enterprises, 1993-1994," William Davidson Institute Working Papers Series 164, William Davidson Institute at the University of Michigan.
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