IDEAS home Printed from https://ideas.repec.org/p/wdi/papers/2001-291.html
   My bibliography  Save this paper

Institutional Technology and the Chains of Trust: Capital Markets and Privatization in Russia and the Czech Republic

Author

Listed:
  • Bruce Kogut
  • Andrew Spicer

Abstract

The introduction of mass privatization policies in Russia and the Czech Republic depended on the crea-tion of impersonal capital markets to finance the needs of privatized companies and to provide a secon-dary market for the trading of securities. Yet, mass privatization created the contradictory conditions of generating millions of poorly informed shareholders, with no efficient markets for the sale of the shares. The absence of financial markets created systematic pressures to move assets by illegal or non-transparent means to users who value them more. Privatization created the incentives to destroy the fi-nancial markets critical to its success. A comparative case analysis of post-privatization market forma-tion in both these countries demonstrates that the functional necessity for these markets does not engen-der their own creation. In the absence of institutional mechanisms of state regulation and trust, markets become arenas for political contests and economic manipulation. The irony of these policies is that a principal lesson has been that market reforms cannot create viable markets, only institutional formation can.

Suggested Citation

  • Bruce Kogut & Andrew Spicer, 2001. "Institutional Technology and the Chains of Trust: Capital Markets and Privatization in Russia and the Czech Republic," William Davidson Institute Working Papers Series 291, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2001-291
    as

    Download full text from publisher

    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/39675/3/wp291.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Richard Podpiera, 1996. "The Czech Investment Fund Industry: Development and Behaviour," William Davidson Institute Working Papers Series 22, William Davidson Institute at the University of Michigan.
    2. D. Stark, 1996. "Recombinant Property in East European Capitalism," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 6.
    3. Hayri, Aydin & McDermott, Gerald A, 1998. "The Network Properties of Corporate Governance and Industrial Restructuring: A Post-Socialist Lesson," Industrial and Corporate Change, Oxford University Press, vol. 7(1), pages 153-193, March.
    4. Peter Murrell, 1995. "The Transition According to Cambridge, Mass," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 164-178, March.
    5. Hingorani, Archana & Lehn, Kenneth & Makhija, Anil K., 1997. "Investor behavior in mass privatization: The case of the Czech voucher scheme," Journal of Financial Economics, Elsevier, vol. 44(3), pages 349-396, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wdi:papers:2001-291. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (WDI). General contact details of provider: http://edirc.repec.org/data/wdumius.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.