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"Loans for Shares" Revisited

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  • Daniel Treisman

Abstract

The "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.

Suggested Citation

  • Daniel Treisman, 2010. ""Loans for Shares" Revisited," NBER Working Papers 15819, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15819
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    File URL: http://www.nber.org/papers/w15819.pdf
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    References listed on IDEAS

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    1. Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1997. "Privatization in the United States," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 447-471, Autumn.
    2. Claude Laurin & Anthony E. Boardman & Aidan R. Vining, 2004. "Government Underpricing of Share-Issue Privatizations," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(3), pages 399-429, September.
    3. Sergei Guriev & Andrei Rachinsky, 2005. "The Role of Oligarchs in Russian Capitalism," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 131-150, Winter.
    4. Irina Denisova & Markus Eller & Timothy Frye & Ekaterina Zhuravskaya, 2007. "Who Wants to Revise Privatization and Why? Evidence from 28 Post-Communist Countries," Working Papers w0105, Center for Economic and Financial Research (CEFIR).
    5. Megginson, William Leon, 2005. "The Financial Economics of Privatization," OUP Catalogue, Oxford University Press, number 9780195150629.
    6. Carneiro, Dionisio Dias & Garcia, Márcio G.P., 1995. "Private international capital flows to Brazil," Financiamiento para el Desarrollo 33, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. Andrei Shleifer & Daniel Treisman, 2005. "A Normal Country: Russia After Communism," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 151-174, Winter.
    8. Grace, John D., 2005. "Russian Oil Supply: Performance and Prospects," OUP Catalogue, Oxford University Press, number 9780197300305.
    9. Serguey Braguinsky, 2009. "Postcommunist Oligarchs in Russia: Quantitative Analysis," Journal of Law and Economics, University of Chicago Press, vol. 52(2), pages 307-349, May.
    10. repec:ilo:ilowps:311759 is not listed on IDEAS
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    Cited by:

    1. Mihályi, Péter, 2014. "Mérlegen a rendszerváltás 25 éve
      [The transition in a 25-year perspective]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 898-922.
    2. John Hamilton & Simon Deakin, 2015. "Russia's Legal Transitions: Marxist Theory, Neoclassical Economics and the Rule of Law," Working Papers wp471, Centre for Business Research, University of Cambridge.

    More about this item

    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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