Fixing Russia S Banks

Fixing Russia's Banks documents how Russia's financial system is built on what Michael S. Bernstam and Alvin Rabushka call ersatz banks. These inferior imitation banks have served largely as tools of the government to redistribute public funds to favored firms. The highly vaunted achievements of privatization, removal of price controls, and foreign trade liberalization have failed to produce growth because of a lack of private financing. National income has declined nearly 40 percent since 1992, with no recovery in sight.

This book examines the failure of economic reform in Russia since 1991, when Boris Yeltsin proclaimed his commitment to economic stabilization, privatization, and price liberalization. Optimism over Russia¡¯s market reforms vanished with the crash of August 1998, when the ruble lost over 70 percent of its value and banks defaulted on their debts and forward currency contracts. Contrary to Yeltsin¡¯s reform promises, the Russian economy of the 1990s more closely resembled a Soviet model than a market-driven one. The Logic of Economic Reform in Russia illuminates the general problems of establishing market economies in settings where the institutional system to support the market has not had decades to develop. Suggesting that corruption may be associated with growth in the early stages of capitalism, Jerry F. Hough argues that the disappointing results of Yeltsin¡¯s reform efforts were not the product of Russian culture or history, but the logical consequences of rational men responding to the incentive system created by economic reform.

Russian multinationals are playing an increasingly important role in the world economy, particularly in some key sectors such as oil, gas and metallurgy. At the same time, Russian multinationals differ in many respects from multinationals from other countries in that they often receive special treatment from the Russian government, and, because of past experiences, international investors are often reluctant to invest in them. This book presents a comprehensive overview of Russian multinationals. It discusses the rise of Russian multinationals, examines Russian multinationals' activities in key sectors, analyses the relationship between Russian multinationals and the Russian government and between Russian multinationals and international investors, and concludes by assessing how Russian multinationals are likely to develop in future.

A study of the actors and institutions that shaped decision-making on privatization in the Russian oil industry between 1992 and 2006. The book analyses the origins of privatization as a policy on a macro, industry-wide level, as well as presenting three in-depth case studies of privatization on a company level.

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"Corporate Governance in Transition Economies" will appeal to a wide segment of the academic market including accounting and finance professors and students because the main theme of the book deals with accounting and financial system reform. Economists in the subfields of transition economics and development economics for it addresses current issues in their field. It will also appeal to scholars in the field of Russian and East European Studies because the book discusses topics involving Russia, Ukraine and other East European countries. Policy analysts who deal with accounting, finance, transition economics or Russia or Eastern Europe will also find this book to be a valuable reference and source of current information.

After the breakup of the USSR, it briefly appeared as though Russia's emerging commercial banks might act as engines of growth for a new capitalist economy. However, despite more than a decade of "reforms," Russia's financial system collapsed in 1998. Why had ambitious efforts to decentralize and liberalize the banking industry failed? In A Fistful of Rubles, Juliet Johnson offers the first comprehensive look at how Russia's banks, once expected to revitalize the nation's economy, instead became one of the largest obstacles to its recovery.Drawing on interviews with Russian bankers, policymakers, and entrepreneurs, Johnson traces the evolution of the banking system from 1987 through the aftermath of the 1998 crash. She describes how dysfunctional institutional procedures left over from the Soviet period hindered the subsequent development of sound financial practices. Johnson argues that these legacies, along with misguided, Western-inspired liberalization policies, led to the creation of parasitic banks for which success depended on political connections rather than on investment strategies. Johnson demonstrates that banking reform efforts ultimately did more harm than good, because Russian officials and their international advisers failed to build the corresponding economic, legal, and political institutions upon which modern market behavior depends.

"Relying on a wealth of detailed institutional, policy, and elite information, Hahn presents a magisterial study that fills a significant void in our understanding of USSR's destruction. While readers may at times feel overwhelmed.... readers are presented with a conceptual approach that can be useful for appreciating ongoing institutional changes and oftern subtle elite maneuverings in the post-Soviet era. --John P. Willerton, University of Arizona "This is a big book in all respects, weighty both in size and scholarship. The core is a meticulous analysis of the perestroika period of the Soviet Union (1985-91). Followed by a concluding general chapter that applies the earlier analysis to post-Communist Russia (1992-2000). The work is based on years of painstaking analysis, considerable archival research, and numerous interviews." -- The Russian Review "This is an important book with a number of substantive strengths." -- Slavic Review The fall of the Soviet communist regime in 1991 offers a challenging contrast to other instances of democratic transition and change in the last decades of the twentieth century. The 1991 revolution was neither a peaceful revolution from below as occurred in Czechoslovakia nor a negotiated transition to democracy like those in Poland, Hungary, or Latin America. It was not primarily the result of social modernization, the rise of a new middle class, or of national liberation movements in the non-Russian union republics. Instead, as Gordon Hahn argues, the Russian transformation was a bureaucrat-led, state-based revolution managed by a group of Communist Party functionaries who won control over the Russian Republic (RSFSR) in the mid-1990s. Hahn describes how opportunistic Party and state officials, led by Boris Yeltsin, defected from the Gorbachev camp and proceeded in 1990-91 to dismantle the institutions that bound state and party. These revolutionaries from above seized control of political, economic, natural and human resources, and then separated the party apparatus from state institutions on Russian Republic territory. With the failed August 1991 hard-line coup, Yeltsin banned the Communist Party and decreed that all Union state organs, including the KGB and military were under RSFSR control. In Hahn's account, this mode of revolutionary change from above explains the troubled development of democracy in Russia and the former Soviet republics. Hahn shows how limited mobilization of the masses stunted the development of civil societies and the formation of political parties and trade unions with real grass roots. The result is a weak society unable to nudge the state to concentrate on institutional reforms society needs for the development of a free polity and economy. Russia's Revolution from Above goes far in correcting the historical record and reconceptualizing the Soviet transformation. It should be read by historians, economists, political scientists, and Russia area scholars. Gordon M. Hahn is visiting scholar at the Hoover Institution, Stanford University. His articles on Soviet and Russian politics have appeared in Europe-Asia Studies, Problems of Post-Communism, Russian Review, and Russian History/Histoire Russe.