Capture of Bankruptcy: Theory and Evidence from Russia

Ariane Lambert-Mogiliansky (), Konstantin Sonin () and Ekaterina Zhuravskaya ()

No 2488, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Laws that work well in a rule-of-law country may produce unexpected outcomes in a corrupt environment. We argue that the legal system in Russia is faulted by the capture of regional divisions of arbitrage courts. We analyse the consequences of this for the efficiency of Russian bankruptcy law. Using a theoretical model and a systematic analysis of available evidence, we conclude the following: First, the governors in alliance with managers of large regional enterprises use bankruptcy institution as a mechanism for effective expropriation of the federal government and the outside investors. And second, the bankruptcy law does not create pressure on managers to restructure; instead, it may even prevent restructuring.

Keywords: Bankruptcy; Capture; Incentives; Regional Governments; Restructuring; Russia; Transition (search for similar items in EconPapers)
JEL-codes: D23 G33 H11 H77 (search for similar items in EconPapers)
Date: 2000-06
View list of references View citations in EconPapers

Downloads: (external link)
http://www.cepr.org/pubs/dps/DP2488.asp (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cpr:ceprdp:2488

Ordering information: This working paper can be ordered from
http://www.cepr.org/pubs/dps/DP2488.asp

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG
Series data maintained by ().