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Investment Funds In Mass Privatization And Beyond Evidence From The Czech Republic And Russia

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  • Pistor, Katharina
  • Spicer, Andrew

Abstract

This paper traces the development of investment privatization funds (IPFs) in Russia and the Czech Republic following the completion of their mass privatization programs. It examines the role that was assigned to IPFs by the architects of mass privatization programs and compares this with the actual development of IPFs in the two countries. The tentative findings suggest that, contrary to expectations, the majority of IPFs have not developed into viable financial intermediaries or key agents of corporate governance. While IPFs faced markedly different constraints in the two countries with respect to the ownership structure of firms and the economic and legal environment in which they had to operate, some important commonalities emerge. Most importantly, the development of IPFs into portfolio managing investment funds appears to have been hampered by a lack of regulatory oversight and investor protection that has undermined the credibility of capital markets and restricted the funds' ability to raise new capital on the market. In response, many IPFs have gone out of business, while the remaining funds have been transformed into holding companies or have sought shelter in financial groups. The paper concludes by stressing the need for additional comparative research on the impact of mass privatization for the development of viable capital markets.

Suggested Citation

  • Pistor, Katharina & Spicer, Andrew, 1996. "Investment Funds In Mass Privatization And Beyond Evidence From The Czech Republic And Russia," Harvard Institute for International Development (HIID) Papers 294382, Harvard University, Kennedy School of Government.
    • Handle: RePEc:ags:hariid:294382
    DOI: 10.22004/ag.econ.294382
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    Citations

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    Cited by:

    1. Buch, Claudia M. & Heinrich, Ralph P., 1997. "The end of the Czech miracle? Currency crisis reveals need for institutional reforms," Kiel Discussion Papers 301, Kiel Institute for the World Economy (IfW Kiel).
    2. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    3. Johan Willner & David Parker, 2007. "The Performance of Public and Private Enterprise under Conditions of Active and Passive Ownership and Competition and Monopoly," Journal of Economics, Springer, vol. 90(3), pages 221-253, April.
    4. Ondrej Vychodil, 2005. "Ownership Concentration and Restructuring in Czech Manufacturing Sector," Finance 0511004, University Library of Munich, Germany.
    5. Willner, Johan & Parker, David, 2002. "The Relative Performance of Public and Private Enterprise Under Conditions of Active and Passive Ownership," Centre on Regulation and Competition (CRC) Working papers 30591, University of Manchester, Institute for Development Policy and Management (IDPM).

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