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Original Articles

Financial Backwardness in Contemporary Perspective: Prospects for the Development of Financial Intermediation in Russia

Pages 605-625 | Published online: 02 Jul 2010

References

  • Heffernan , Shelagh . 1996 . Modern Banking in Theory and Practice , London : John Wiley and Sons .
  • 1996 . Kommersant"-Daily , 16 July : 5 chapter 1. It should, however, be noted that, in the Russian case, gaps in legislation meant that until 1995-96 any financial firm had to register as a bank;
  • Tompson , William . 1998 . 'Russia's "Ministry of Cash": Sberbank in Transition' . Communist Economies & Economic Transformation , 10 ( 2 ) June : 146 – 147 . The question of just how much Russian households save remains controversial. For a look at the various estimates of household savings in Russia and the problems they present, see Sutela, 'The Role …', pp. 105-108;
  • Levine , Ross . 1997 . 'Financial Development and Economic Growth: Views and Agenda' . Journal of Economic Literature , 35 ( 2 ) June : 690 Financial systems in centrally planned economies were, of course, chronically underdeveloped, because the role of money was passive and transaction costs (as well as most other costs) were largely ignored
  • Diamond , D.W. 1984 . 'Financial Intermediation and Delegated Monitoring' . Review of Economic Studies , 51 ( 2 ) : 393 – 414 .
  • Fama , E.F. 1985 . 'What's Different about Banks?' . Journal of Economics , 15 ( 1 ) : 29 – 39 . At national level, the IMF performs a similar function. The conclusion of an IMF deal often unlocks funds from other sources and has a favourable impact on investor sentiment in general
  • Tompson , William . November 1998 . “ 'The Future of the Russian Banking System: Liquidation or Mergers?' ” . In Russia in Crisis , Edited by: Herd , Graeme . November , Conflict Studies Research Centre El01 .
  • Tompson , William . 1999 . “ 'The Bank of Russia and the 1998 Rouble Crisis' ” . In Anatomy of the 1998 Russian Crisis , Edited by: Tikhomirov , Vladimir . Melbourne : CERC .
  • Schumpeter , Joseph . 1934 . The Theory of Economic Development, translated by Opie Redvers , Cambridge : Harvard University Press .
  • Hicks , John . 1969 . A Theory of Economic History , Oxford : Clarendon Press .
  • Lucas , Robert . 1988 . 'On the Mechanics of Economic Development' . Journal of Monetary Economics , 22 ( 1 ) July : 3 – 42 . 6 Levine, p. 688; for examples, see
  • Stern , Nicholas . 1989 . 'The Economics of Development: A Survey' . Economic Journal , 99 (397) September : 597 – 685 .
  • Meier , Gerald and Seers , Dudley . 1984 . Pioneers in Development , Oxford : Oxford University Press .
  • Sutela , Pekka . 1998 . The Road to the Russian Market Economy , 4 Helsinki : Kikkimora .
  • Gaddy , Clifford and Ickes , Barry W. 1999 . 'An Accounting Model of the Virtual Economy in Russia' . Post-Soviet Geography and Economics , 40 ( 2 ) March : 95 – 97 .
  • Ericson , Richard E. 1998 . 'Economics and the Russian Transition' . Slavic Review , 57 ( 3 ) Fall : 622
  • Ericson , Richard E. 1995 . “ 'The Russian Economy Since Independence' ” . In The New Russia: Troubled Transformation , Edited by: Lapidus , Gail . 63 Boulder : Westview .
  • Sutela, 'The Role ..', pp. 107, 120.
  • Russian Economic Trends, 8, 1, 1999, p. 84.
  • Woodruff , David . 1999 . Money Unmade: Barter and the Fate of Russian Capitalism , Ithaca : Cornell University Press . Reliance on non-monetary exchange appears to have fallen somewhat after August 1998, but the surveys conducted under the auspices of the Russian Economic Barometer continue to show over 40% of industrial sales being settled via barter. Russian Economic Barometer, 8, 2, Spring 1999, p. 76. For the most comprehensive discussion of the causes of non-monetary exchange available, see
  • Tompson , William . 1999 . 'The Price of Everything and the Value of Nothing? Unravelling the Consequences of Russia's "Virtual Economy" ' . Economy & Society , 29 ( 2 ) May and Petr A. Karpov, 'O prichinakh nizkoi sobiraemosti nalogov (neplatezhei fiskal'noi sisteme), obshchikh prichinakh "krizisa neplatezhei" i vozmozhnosti vosstanovleniya platezhesposobnosti rossiiskikh predpriyatii: otchet Mezhvedomstvennoi balansovoi kommissii', Moscow: unpublished report, December 1997
  • Russian Economic Trends Monthly Update, August 1999, Table 7; and TsBR data (see note 37). Total (commercial and central bank) domestic credit in the financial system at the end of May 1999 amounted to Rb1518.4 billion, not much more than total overdue payables.
  • For a discussion of the politics of credit allocation after the collapse, see William Tompson, 'Nothing Learned, Nothing Forgotten: Restructuring without Reform in Russia's Banking Sector', paper delivered at the conference on 'Shaping the Economic Space in Russia: Decision Making Processes, Institutions and Adjustment to Change', Bundesinstitut fiir ostwissenschaftliche und internationale Studien, Cologne, 26-28 May 1999.
  • Keynes , John Maynard . 1920 . The Economic Consequences of the Peace , 220 London : Macmillan .
  • Ickes , Barry W. , Murrell , Peter and Ryterman , Randi . 1997 . 'End of the Tunnel? The Effects of Financial Stabilization in Russia' . Post-Soviet Affairs , 13 ( 2 ) April-June : 105 – 133 . On the implications of doubts about stabilisation for firm behaviour, see
  • Yakovlev , Andrei . 1999 . “ 'Mutual Dependence of Barter, Arrears and Tax Evasion in the Russian Economy' ” . Moscow mimeo: Higher School of Economics,. It is worth noting that enterprises' transaction account balances rose by over 80% in the last five months of 1998, far faster than PPI inflation. This reflected the fact that, with the collapse of the government paper market and the restrictions imposed on the forex market, the firms had nothing else to do with their money
  • McFaul , Michael . 1997 . 'When Capitalism and Democracy Collide in Transition: Russia's "Weak" State as an Impediment to Democratic Consolidation' , Working Paper No. 1, Program in New Approaches to Russian Security Cambridge , MA : Harvard Russian Research Center .
  • Prill , Oliver . 1995 . Financial Sector Reform in the Soviet Union/Russia since 1987: Options and Consequences , 165 – 166 . University of Oxford . DPhil Thesis,
  • Ickes , Barry W. and Ryterman , Randi . 1992 . 'The Interenterprise Arrears Crisis in Russia' . Post-Soviet Affairs , 8 ( 4 ) : 333 – 336 . The efficient functioning of the financial system depends on the availability of good enterprise-specific financial information, but the massive chains of non-payments can render any serious assessment of an enterprise's viability impossible. See
  • Ickes , Barry W. and Ryterman , Randi . 1993 . 'Roadblock to Economic Reform: Inter-Enterprise Debt and the Transition to Markets' . Post-Soviet Affairs , 9 ( 3 ) : 233
  • Khandruyev , Aleksandr . 1996 . 'Kreditnaya politika i nalogovye perspektivy' . Ekonomika i zhizn' , 49 : 3 This is as true of Russian banks and the Russian state as of industrial firms. One commentator has suggested that the determination not to pay debts, as one of the few things which unites almost all Russians, could be critical in the resolution of Russians' search for a new 'national idea'.
  • 1999 . Kommersant"-Daily , 22 April
  • Anderson , Ronald W. and Kegels , Chantal . 1998 . Transition Banking: Financial Development of Central and Eastern Europe , 4 – 5 . Oxford : Clarendon Press . Anderson & Kegels also address a sixth requirement, establishing investors' control rights, but this concerns equity investment rather than intermediation
  • For an excellent study of enterprise survival strategies based on 'relational capital' and the avoidance of market disciplines, see Clifford Gaddy & Barry W. Ickes. 'To Restructure or Not to Restructure: Informal Activities and Enterprise Behavior in Transition', Washington: mimeo, May 1998.
  • Tompson, 'Old Habits …', pp. 1170-1176.
  • 1996 . Nezavisimaya gazeta , 18 July : 4 This is the view taken by Koshkareva & Narzikulov;
  • Hellman , Joel . 1996 . 'Russia Adjusts to stability' . Transition , 17 May : 6 – 10 . For a Western view, see
  • 1996 . Finansovye izvestiya , 26 November : II – III .
  • 1997 . Delovoi Peterburg , 28 March See, for examples, Samarskoe obozrenie, 25 March and 4 November 1996;
  • 1997 . Delovoi mir , 28 May On Mayor Luzhkov's extension of control over Moscow's banking system, see
  • Kirichenko , Nikita and Ivanter , Aleksandr . 1998 . 'Moskva' . Ekspert , 23 March : 30
  • 1998 . Segodnya , 24 March
  • 1999 . Kommersant"-Daily on , 19 March The letter is undated but the text indicates that it was written prior to final adoption of the law on the bankruptcy of credit organisations, which occurred on 18 February. It was published by
  • 1999 . Segodnya , 2 April The letter appears to reflect the TsBR's settled position, as the points made in it have since been repeated by TsBR officials in speeches, press briefings and interviews (for examples, see
  • 1999 . Kommersant"-Daily , 2 April
  • 1998 . Izvestiya , 6 November Goncharov, p. 4;
  • Rushailo , Petr . 1998 . 'TsB raionnogo masshtaba' . Kommersant" VLAST' , 3 November : 26 – 27 .
  • 1999 . Finansovaya Rossiya , 18 February
  • 1997 . Belorusskaya delovaya gazeta , 13 October The numbers here refer to credit institutions actually operating; the number registered at any given time is significantly higher
  • 1993 . Oxford Analytica East Europe Daily Brief , 22 December Over 30 were assassinated in 1993, 16 more in 1994 and 46 in the first eight months of 1995; see; and Prill, p. 89
  • Sberbank's position is examined in detail in Tompson, 'Russia's "Ministry of Cash"'. The government's reliance on Sberbank to roll over the GKO debt increased in the mn-up to the crisis, and Sberbank has also lent substantially to the government since the financial collapse.
  • 1997 . Delovoi Peterburg , 28 March This tendency has been particularly pronounced--and controversial--in Moscow and St Petersburg. In the latter case, the banking lobby did successfully check some moves by the administration to grant a privileged status to one of their number; see
  • 1997 . Nevskoe vremya , 28 March
  • 1997 . Kommersant"-Daily , 28 and 29 March
  • 1997 . Kommersant"-Daily , 13 August On Luzhkov's creation of a municipal 'superbank' in Moscow, see
  • 1997 . Kommersant-"Daily , 28 February on the concentration of budgetary funds in Novosibirsk
  • Johnson , Juliet . 1997 . 'Russia's Emerging Financial-Industrial Groups' . Post-Soviet Affairs , 13 ( 4 ) October-December On the revival of pocket banks, see Profil', 22 February 1999. The link between shareholding and the provision of financial services is tightest in Russia's so-called financial-industrial groups; for a pre-collapse overview of these structures, see
  • 1997 . 'Special Report: Finance for Development' . Russian Economic Trends Monthly Update , June : viii
  • Lysova , L. 1997 . 'Regional'naya statistika bankovskoi sistemy konstatiruet' . Ekonomika i zhizn' , 31 : 4 In 1995, for example, Orel, Tambov, Novgorod, Kursk, Vladimir, Leningrad and Lipetsk oblasti all had fewer than 10 banks, as did the Karelian, Ingush, Tuva and Khakassian republics. In a number of these there were only two commercial banks
  • 1998 . Segodnya , 29 December See Tompson, 'Nothing Learned …'. See also
  • 1998 . Vremya MN , 28 December
  • 1999 . Segodnya , 26 February
  • 1999 . RIA Novosti , 15 March
  • 1999 . Agentstvo Rosbizneskonsalting , 22 March
  • 1999 . United Financial Group, Russia Morning Comment , 23 March : 6
  • 1999 . Finansovye izvestiya , 24 March
  • United Financial Group . 1999 . Russia Morning Comment , 1 July : 14 – 15 .
  • Sokolov , Jaroslav V. and Kovalev , Valerii . 1996 . 'In Defence of Russian Accounting: A Reply to Foreign Critics' . The European Accounting Review , 5 ( 4 ) December : 743 – 762 .
  • United Financial Group . 1999 . Russia Morning Comment , 17 March : 6
  • 1999 . Nezavisimaya gazeta , 23 March
  • 1999 . United Financial Group, Russia Morning Comment , 1 June : 7
  • For an extended discussion of this issue, see Tompson, 'The Price of Everything…', pp. 263-266.
  • See Ickes & Ryterman, 'The Interenterprise Arrears Crisis in Russia', pp. 333-336; and 'Roadblock to Economic Reform: Inter-Enterprise Debt and the Transition to Markets', p. 233.
  • The reasons for this inability to adjust nominal prices are discussed at length in Woodruff, Money Unmade, chapter 5; see also David Woodruff, 'Beyond the Rouble: The Politics of Monetary Consolidation in Russia', paper presented to the Annual Conference of the American Association for the Advancement of Slavic Studies, Boston, November 1996; and Tompson, 'The Price of Everything …'.
  • Woodruff , David M. 1999 . 'It's Value That's Virtual: Bartles, Roubles and the Place of Gazprom in the Russian Economy' . Post-SovietAffairs , 15 ( 2 ) April-June : 130 – 148 . Tompson, 'The Price of Everything …', pp. 261-262, 268; Woodruff s solution is to distinguish between rubles (live money) and 'bartles'; see
  • Tompson , William . August 1998 . “ 'Russian Bankruptcy Law Considered' ” . August , London Mimeo,
  • 1998 . Russian Economic Trends , 7 ( 2 ) : 49 – 57 .
  • Hendley , Kathryn , Ickes , Barry W. , Murrell , Peter and Ryterman , Randi . 1997 . 'Observations on the Use of Law by Russian Enterprises' . Post-SovietAffairs , 13 ( 1 ) January-March : 19 – 41 .
  • Hendley , Kathryn , Murrell , Peter and Ryterman , Randi . 2000 . 'Law, Relationships, and Private Enforcement: Transactional Strategies of Russian Enterprises' . Europe-Asia Studies , 52 ( 4 ) June : 627 – 656 .
  • Hendley , Kathryn , Murrell , Peter and Ryterman , Randi . March 1999 . “ 'Law Works in Russia: The Role of Legal Institutions in the Transactions of Russian Enterprises' ” . March , unpublished paper,, available at http://papers.ssrn.com/paper.taf?ABSTRACT_ID =151132)
  • Robinson , Joan . 1952 . “ 'The Generalization of the General Theory' ” . In The Rate of Interest, and Other Essays , Edited by: Robinson , Joan . 86 London : Macmillan . Robinson's phrase has a CPE equivalent, familiar to many students of the Soviet economy: the claim that 'finance follows the plan'
  • King , Robert G. and Levine , Ross . 1993 . “ 'Financial Intermediation and Economic Development' ” . In Financial lntermediation in the Construction of Europe , Edited by: Mayer , Colin and Vives , Xavier . 156 – 189 . London : CEPR . For detailed descriptions of the variables in question, see Levine, pp. 704-705. The underlying study on which he draws is
  • Sutela, 'The Role …', p. 99.
  • Komulainen , Tuomas . 1999 . 'The Challenge of Restructuring Russian Banks' . Russian Economy: The Month in Review , 2 : 4 Tompson, 'Old Habits …', pp. 1176-1177;
  • Heffernan , Shelagh . 1996 . Modern Banking in Theory and Practice 44 – 45 . London
  • Tompson . “ 'Old Habits …' ” . 1177 – 1178 . Russian banks typically lend for periods of three to six months, with credits extended for 12 months or more generally accounting for well under 10% of total lending.
  • 1996 . Finansovye izvestiya , 26 November
  • Sutela, 'The Role …', pp. 100-105.
  • Strel'tsov , A. 1999 . 'Diskussiya vokrug bankrotstva' . Ekonomika i zhizn , 4 : 44 For a detailed look at the law, see Tompson, 'Nothing Learned'; see also
  • 1999 . Rossiiskaya gazeta , 22 January
  • Andreeva , Irina . 1999 . 'Po pravu sil'nogo' . Itogi , 2 February : 26 – 28 .
  • 1999 . Finansovaya Rossiya , 8 April It is also noteworthy that the TsBR itself prepared the normative acts which will determine what the law's provisions mean in practice.
  • 1999 . Vremya MN , 5 March
  • Kuz'minov , Ya. 1999 . Rossiiskaya ekonomika: Usloviya vyzhivaniya, predposylki razvitiya , 19 Moscow : Gosudarstvennyi Universitet, Vysshaya shkola ekonomiki .
  • Makovskaya , Elena . 1998 . 'Voina za nasledstvo "Toko"' . Ekspert , 21 December : 22 – 24 . Two high-profile bankruptcies involving major banks have drawn attention to the potential for abusing the law. See
  • P'yanykh , Gleb . 1999 . 'Nesostoyatel'noe bankrotstvo' . Kommersant"-VLAST' , 2 March : 22 – 24 .
  • P'yanykh , Gleb . 1999 . 'Vse, chto vy boyalis' uznat' pro bankrotstvo' . Kommersant"-Den'gi , 17 February : 31 – 34 . More recently, charges of political interference and abuse of process have surfaced repeatedly in the battles for control of the oil company Sidanko and certain of its subsidiaries, particularly Chernogorneft
  • Goncharov , A. 1998 . 'Bankovskaya khirurgiya sposobna na neozhidannye rezul'taty' . Ekonomika i zhizn , 46 : 4 On the importance of tax collection in the restructuring effort, see Tompson, 'Nothing Learned';
  • 1999 . Segodnya , 9 April
  • 1999 . Vremya MN , 13 April
  • United Financial Group . 1999 . Russia Morning Comment , 6 September : 8 Even the Agency for Restructuring Credit Organisations (ARKO) has been drawn into the tax collection business; it is to be rewarded with the right to retain a share of any taxes it collects.
  • 1999 . Kommersant"-Daily , 15 September A draft law on the creation of a government collegium to supervise ARKO, unveiled in September 1999, would ensure that tax ministry representatives dominated the collegium;
  • 1999 . Delovoi Peterburg , 22 February
  • 1999 . Kommersant"-Daily , 8 April
  • 1999 . RIA-Novosti , 14 April These figures exclude Sberbank
  • United Financial Group, Russia Morning Comment, 27 April, 1999, p. 7.
  • United Financial Group . 1999 . Russia Morning Comment , 7 October : 8
  • The Rouble and the Banking System', Russian Economic Trends Monthly Update, May 1998, p. 6.
  • Rostowski , Jacek . 1995 . “ 'Introduction' ” . In Banking Reform in Central Europe and the Former Soviet Union , Edited by: Rostowski , Jacek . 13 Budapest : CEU Press .
  • Andreeva , Irina and Kalinichenko , Natalya . 1999 . 'Nashi den'gi--v trubu' . Itogi , 2 March : 19 – 21 .
  • 1999 . Finansovye izvestiya , 19 May See especially Aksenenko's comments in
  • 1999 . 'Bankrotstv bol'she ne budet' . Kommersant-Vlast' , 23 March : 14 For a detailed and highly critical analysis of the proposed amendment, see
  • Zhukov , Pavel . 1999 . 'Lenivyi sobstvennik sredi "velikikh kombinatorov"' . Ekonomika i zhizn , 15 : 1
  • Vitryansky , Vasilii . 1999 . 'Bankrotstvo … v otstavku?' . Ekonomika i zhizn , 17 : 1 On the problems raised by the balance sheet definition under the old law, see
  • Tompson , William . August 1998 . “ 'Russian Bankruptcy Law Considered' ” . August , University of London . mimeo,

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