"Loans for Shares" Revisited / Daniel Treisman.

By:

Treisman, Daniel

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w15819.Publication details: Cambridge, Mass. National Bureau of Economic Research 2010.Description: 1 online resource: illustrations (black and white)Subject(s):

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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.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w15819 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w15816 Constrained Job Matching: Does Teacher Job Search Harm Disadvantaged Urban Schools? /	nber w15817 Leverage and Asset Bubbles: Averting Armageddon with Chapter 11? /	nber w15818 On the Taxation of Private Transfers /	nber w15819 "Loans for Shares" Revisited /	nber w1582 Labor Relations, Wages and Nonwage Compensation in Municipal Employment /	nber w15820 Large Scale Institutional Changes: Land Demarcation Within the British Empire /	nber w15821 Limits of Arbitrage: The State of the Theory /	Next

March 2010.

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.