Financial Crisis, Economic Recovery, and Banking Development in Russia, and other FSU Countries

Haizhou Huang (), Dalia Marin and Chenggang Xu

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: This paper provides a unified analysis for the onset of the 1998 financial crisis and the strong economic recovery afterward in Russia and other former Soviet Union countries. Before the crisis a banking failure arose owing to the coexistence of a lemons credit market and high government borrowing. In a lemons credit market low credit risk firms switched from bank to nonbank finance, including trade credits and barter trade, generating an externality on banks’ interest rates. The collapse of the treasury bills market in the financial crisis triggered a change in banks’ lending behavior, providing initial conditions for banking development.

Keywords: banking development; institutional trap; financial crisis (search for similar items in EconPapers)
JEL-codes: D82 G21 G3 O16 P34 (search for similar items in EconPapers)
Date: 2004-06
New Economics Papers: this item is included in nep-fdg, nep-fin, nep-fmk and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:79

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