Working Paper: CEPR ID: DP17415
Authors: Toan LD Huynh; Khanh Hoang; Steven Ongena
Abstract: We assess the economic effects of two decades of recent sanctions on Russian firms. We find that foreign sanctions leave energy firms in Russia unaffected but do undermine firm performance in the other (non-energy) sectors. In these other sectors, sanctions have a negative impact on capital expenditures and R&D intensity. Cost of capital and firm-level political risk also increase in sanctions. While firms with connections to Russian oligarchs linked to Putin are unaffected, sanctions do not differentiate in their impact between firms with Russian and foreign origin. Russian firms seemingly were prepared for the Crimea event and the Ukraine war.
Keywords: firm performance; russia; sanctions; political connection
JEL Codes: G20; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Firm connections to Russian oligarchs (L14) | firm performance (L25) |
| Foreign sanctions (F51) | firm performance (L25) |
| Foreign sanctions (F51) | capital expenditures (CAPEX) (G31) |
| Foreign sanctions (F51) | R&D intensity (O32) |
| Foreign sanctions (F51) | firm-level political risk (F23) |
| Foreign sanctions (F51) | performance in non-energy sectors (L59) |