Working Paper: NBER ID: w15819
Authors: Daniel Treisman
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.
Keywords: Loans for Shares; Russian Economy; Privatization; Economic Growth; Inequality
JEL Codes: H82; P26; P31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| loans for shares program (G51) | Russia's economic rebound post-1999 (F69) |
| oligarch ownership (P26) | economic growth (O49) |
| ownership structure post-loans for shares (G32) | economic performance of Soviet-era industrial managers (P27) |
| privatization (L33) | firm efficiency and productivity (D22) |
| loans for shares (G51) | wealth inequality (D31) |