CENTRAL EUROPEAN UNIVERSITY

DEPARTMENT OF ECONOMICS

MONEY, BANKING AND FINANCE

Feasibility of the German-type model of UniversalFeasibility of the German-type model of Universal

Banks in the Post-Communist Economies. The CaseBanks in the Post-Communist Economies. The Case

of Russiaof Russia

Professor: Jacek Rostowski

Prepared by:

Asenka Asenova

MA in Economics, 1styear

ID# 161801

Spring Semester, 2006,

Budapest

Pages of Contents

Introduction

I. The German-type model of universal banks

1. Key characteristics

2. The German model and economic growth

II. Feasibility of the German model in the post-communist economies in the early

years of transition

III. Feasibility of the German model in the later stages of transition

IV. The case of Russia

1. General overview of the Russian banking sector

2. Empirical evidence for the bank-enterprise relationships

Conclusions

Appendices List

Appendix no 1: Indices of real credit and real GDP in Russia, 1992-1995

Appendix no 2: Credit and non-performing loans in the Russian banking sector, 1992-

1997

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Introduction

Banks are essential for each country’s economy, since no growth can be achieved unless

savings are efficiently channeled into investment. In this respect, the lack of a full-fledged

banking system has often been identified as a major weakness of the centrally planned

economies. Therefore, reforming the banking sector in the former communist countries and

creating a new culture of trust and confidence has been a crucial task in the process of

transition to a market economy.

Because of the vital importance of the banking reforms in the post-communist economies, a

considerable amount of literature has focused on the issue of designing an optimal financial

system as a critical element of structural reforms. Undoubtedly, the fact that establishment of

a German-type model of universal banks in the former communist countries from Central and

Eastern Europe has occurred is probably proof that it was the most desirable outcome, and

moreover, an outcome that complies with the ‘spirit of the European financial institutions’

(Grosfeld, 1994).

However, in this paper I shall examine the feasibility and desirability of the German-type

model in the transition countries in the early and intermediate stages of transition for the

accomplishment of sustainable economic growth. In analyzing this issue I will provide

empirical evidence from the evolution of the banking system in Russia in the period between

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AbstractThis paper examines the feasibility and desirability of the German-type model of universal banks for the achievement of sustainable economic growth in the post-communist economies. This issue is addressed taking into consideration the economic conditions in the countries in transition in the early and medium stages of reforms. The paper also presents empirical evidence from the evolution of the banking system in Russia in the early to mid- 1990s from the viewpoint of the relationship between banks and industry. The main conclusion drawn is that the applicability of the German-type model requires the presence of certain conditions that were at large not established in Russia; hence, the banking system had a rather contradictory effect on investment and economic growth.

1991-1995 from the viewpoint of the relationship between enterprises and banks, and the

impact of these relationships on investment and economic growth.

I. The German-type model of universal banks

1. Key characteristics

Following Grosfeld (1994) I shall use a distinction of three major functions performed by the

financial institutions, while characterizing the main features of the German-type model of

universal banks, namely: financing, information and control. Financing is defined by the

author as creating channels to transform savings into investment; the information aspect here

is analyzed from the viewpoint of generation of information on the value of the firms and on

different investment opportunities. Finally, control, is viewed as imposing monitoring on the

corporate management.

A major distinction of the German-type financial system is the dominance of a relatively

small number of banks (the ‘big three’ or ‘big four’ largest banks), involved in both

commercial and investment banking and, maintaining close relationships with the industry.

German-type banks provide a wide range of financial services but the element of key

importance is the accent on long-term money lending to enterprises. On the information part,

little information on the value of securities is made publicly available; instead, banks have a

rather privileged access to it through the established close links with the industries (Grosfeld,

1994). Lastly, with respect to corporate control, the German-type model has as a main feature

high concentration of ownership, i.e. companies own substantial stakes of each other. As

expected in this situation, banks have both the incentives and the ability to take active

participation in shaping the major decisions of the enterprises. The last means that banks are

in a position to also influence the investment decisions of non-financial companies. Hostile

takeovers and leveraged buy-outs are rare in the German-type model.

In short, the German-type model of universal banks has as a core element the ‘close

participation in the ownership and control on non-financial firms’ (Rostowski, 1998, p. 320).

The impact of this particular system on economic growth has been a source of numerous

arguments and the next section will present some of these views.

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2. The German model and economic growth

Many authors have eloquently supported the idea of German-type banks. According to

Mayer, for example, ‘the distinctive feature of successful financial systems is their close

involvement in industry’ (Mayer, 1988). Additionally, Gerschenkron (1968) argues that in

the middle of the nineteenth century universal banks in Germany – a combination of

commercial and investment banks – strongly contributed to the industrialization of the

economy serving as a substitute for the insufficiency of wealth and entrepreneurial expertise

(Gerschenkron through Rostowski, 1998). A similar case regarding provision of funds

available for investment, has received large support by several authors claiming that a bank’s

stake in an enterprise would prevent banks from behaving too cautiously when providing

credit through allowing them to reap some benefits from financing riskier projects (see e.g.

Dewatripond and Tirole, 1991). Another, mostly theoretical, argument in support of the idea

of German-type banks rests on the concept that banks would help reduce the existing moral

hazard problem between providers of finance, managers and employees via the creation of

long-term commitment.

The first, and probably most obvious, counterargument questions the very idea of

Gerschenkron for the universality of the German model, claiming that no particular kind of

system by itself could do well in explaining economic growth. One possible reason for this is

the fact that there are too many other factors, such as macroeconomic policy and legal

framework that play a considerable role for realization of growth. Empirical evidence shows

that Austria, for instance, had the same banking structure as Germany but banks had a

completely different behavour: they preferred to provide credits to well-established profitable

firms, avoiding both risky work out of long-term plans and providing entrepreneurial

expertise (Cameron, 1972). More importantly, some authors provide arguments against the

introduction of the German model, since banks as large investors might be too soft because

they fail to terminate unprofitable projects they have invested in (Gertner, Scharfstein &

Stein, 1994).

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Naturally, the process of transition from centrally planned to market economy in the post-

communist countries has given rise for new arguments in favour and against the German-

type banking system. A significant number of economists have been favouring the idea of

implementing a German model with strong universal banks in the former communist

countries as being the best suitable solution with respect to the needs of these economies.

Moreover, they argue that it is exactly this type of system that emerges in these economies,

including the particular case of Russia (see eg. Belyanova, Rozinsky, 1995). The main point

of introducing such a model in the post communist countries is that universal banks could

mobilize a considerable amount of savings and make them available as capital for investment

in strategic projects of the firms, as well as impose a better corporate control structure on the

firms; thus, they might play the role of an instrument thought which the economy would

catch up with the advanced market economies. However, most authors, who believe in the

potential of the German model to boost investment and economic growth in the post-

communist economies, often underline that fact that this mechanism is only possible if banks

hold concentrated equity of their debtor clients (see e.g. Gorton and Schmid, 1994). This can

be regarded as an important precondition for the introduction of this model, together will all

other conditions that will be discussed further on.

Another argument supporting the bank-based system in general relies on the idea that the

development of efficient security markets on average takes much longer time as compared to

the time period needed for the establishment of a stable banking system. (e.g. Popov, 1999).

At the same time, however, another body of literature gives rise to various counterarguments

claiming that the initial conditions in the transition economies provided little scope to

develop banking systems of German type, at least for the early years of transition

(Rostowski, 1998). Hence, the main question raised is whether banks in the post-communist

countries could play the role of universal banks of German type, taking into consideration the

specific conditions in these economies. This issue will be addressed in the next section of the

paper from the viewpoint of the situation in transition economies in the early stages of

transition and its later evolution.

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II. Feasibility of the German model in the post-communist economies in the early years of

transition

A key feature of the post-communist economies in the early years of transition was the

exceptionally strong degree of uncertainty due to fundamental macroeconomic changes

taking place (e.g. trade and price liberalization), as well as to high indebtedness of the state-

owned enterprises. At the same time, the new state-owned commercial banks, separated from

the Central bank, were flawed with a major weakness: lack of adequate banking skills. These

two factors taken together, led to significant money loss from short-term lending in most

transition economies. And, although, it is namely the long-term money lending which is

supposed to ensure support for the introduction of the German-type system, paradoxically it

provides a strong argument against the German model, for had the banks been involved in

long-term money lending the scale of the losses incurred would have been even greater

(Rostowski, 1998). Moreover, short-term lending would allow the banks to acquire some

expertise in dealing with short-term debt – a precondition to develop skills for medium and

long-term money lending; the later being an absolutely necessary condition for the feasibility

of the German model.

Another point closely related to the feasibility of the German model in the early years of

transition concerns the ownership structure of the post-communist economies. Due to the

different pace of the reforms in the different macroeconomic sectors, the situation in most

transition economies was such that privatization of the state-owned enterprises was done

prior to privatization in the banking sector. At the same time, as already mentioned, first and

perhaps most noticeable characteristic of the German-type banks is their ‘close participation

in the ownership and control on non-financial firms’ (Rostowski, 1998). Consequently,

introduction of the German model in a situation where banks remain state-owned and a great

deal of enterprises has already been privatized would imply re-nationalization of the

economy – result neither politically, nor economically desirable (Rostowski, 1998).

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An argument very much linked to the ownership structure is also proposed by Grosfeld

(1994): on the one hand, a key feature of the German system is that little information on the

enterprise value is publicly available, while banks have a privileged access to information on

the firms’ value and liabilities; on the other hand, it is crucially important for the

restructuring of the former centrally planned economies, aiming at starting an efficient

allocation of resources, to generate adequate information on various investment opportunities

and strategies. Based on this contradiction, Grosfeld argues that if chosen in the early process

of economic transformation, the German model may hinder, rather than facilitate, the quality

of the much needed restructuring process.

One last counterargument for the introduction of the German model concerns the major aim

of the banking reforms in the post-communist economies, i.e. that banks switch from

providing ‘systematically bad’ to providing ‘systematically good’ loans (Rostowski, 1998).

Thus, the German model creates a risk that banks in the post-communist countries would

become a crossing point of various interests: governmental, political or these of large

financial-industrial groups (as in the case of Russia), which might harm the process of their

transformation into efficient institutions.

All the abovementioned arguments provide enough grounds to conclude that the German

model of universal banks is neither desirable, nor feasible in the early years of transition to

market economy characterized by state ownership and poor banking skills. Thus, in the next

section I shall further the applicability of the German system in the post-communist

economies in the later stages of transition.

III. Feasibility of the German model in the later stages of transition

What characterizes the later stage of the transition process is that banks have already

developed certain skills for medium and long-term lending; enterprises have started a more

efficient allocation of resources and some output growth has been achieved. The later also

implies growing enterprise demands for investment capital.

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The relevance of the German model for the transition economies in these conditions would

depend on various considerations; for instance, one such consideration, is that in this

particular situation the German model would provide cheaper sources of long-term funds to

firms at the cost of more expensive external equity (Steinherr, Huveneers, 1992), as well as

that it provides cheaper capital in general. Of all such factors I will discuss two in more

details because of their key importance. These are the implemented method of privatization

and the inflationary history of the country.

The role of privatization method for the development of a certain type of banking system in

the post-communist economies could be seen in at least two directions. On the one hand,

introduction of a particular bank model might be favoured taking into consideration its

potential effects on the speed and quality of the privatization process; in this respect some

authors argue that banks of universal type lower the incentives to privatize since they are

unwilling to give up their special relationships with the SOE sector (Grosfeld, 1994). Hence,

the German-type model would slow down the speed of privatization, although it would

possibly increase its quality as ‘flotations would become harder’ (Rostowski, 1998).

At the same time, it has been argued that the type of banking model that emerged in the

transition economies was not a matter of a conscious choice of policy makers but could be

seen as a result of a number of factors, among which the chosen privatization method

together with the ownership concentration (Popov, 1999). In this respect, mass-privatization

scheme, creating a huge number of shareholders and implying widely dispersed ownership,

would facilitate the development of security markets and, thus, an Anglo-Saxon type of

banking system1. Conversely, direct sale of assets (via auctions or tenders) is much less

favourable for the development of the security markets; it creates a concentrated ownership

and hence, would facilitate emergence of banking systems of a German-type. One such

possible example is Poland, where voucher privatization has been rather modest, and banks

were given incentives to take equity in holding of firms.

1 It is arguable whether this theoretical argument worked well in practice. One counterexample is the voucher privatization scheme implemented in the Czech Republic, which created a huge number of owners and dispersed ownership and, indeed, boosted the development of the stock market. However, through the stock market ownership was later on re-concentrated; moreover, big bulks of shares ended up in the hands of bank-managed financial investors.

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Another factor of crucial importance that shaped the type of the emerging banking system in

the post-communist economies is the inflation history of the countries (Rostowski, 1998).

The role of the inflation record could be sought in the following direction: high inflation

implies high volatility of the nominal interest rates, which, in turn, leads to an increased risk

to both creditors and debtors (regardless of the fact whether contacts are based on fixed or

non-fixed interest rates). In this situation, choice of a variable nominal interest rate would

mean a high depreciation of loans, while at the same time a fixed one would imply extremely

high volatility of the real interest rate. In consequence, one can conclude that in these

circumstances both suppliers and demanders of capital can protect themselves from interest

rate volatility by using equity rather than debt. Hence, these initial conditions provide a

strong case in favor of a model of close bank-enterprise relationships.

In the particular case of the post-communist economies a good proxy for the feasibility of the

German-type model of banking system is the ratio of bank credit to non-government sector to

GDP (Rostowski, 1998). As expected, in countries with higher inflation the general public

would minimize holdings of domestic currency, which in turn, would mean a collapse of real

credit available in the economy. This factor, among others, leads to the conclusion that

countries with low credit to non-government sector/GDP ratios cannot adopt the German

model of banking system simply because the amount of credit available to the banking

system would be far from sufficient in order to respond to the enterprises’ capital needs.

All these considerations provide a logical answer to the first main question of the paper: even

in the later stages of transition the German-type model of banks is not feasible for most of the

countries; in fact, the only countries for which the German type universal banking system

was applicable in the intermediate transition stage were the Czech Republic, Hungary and

Slovakia (Rostowski, 1998). But this does not answer the question about the situation in

Russia, which has quite often proved to be the exception of the rule. In the next section I will

focus on the pattern of banking sector development in Russia and the bank-enterprise

relationships in the first half of the 1990s, as well as on the impact of the particular banking

structure that emerged in the country on investment financing.

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IV. The case of Russia

1. General overview of the Russian banking sector

Russia started reforms in the banking sector at the end of the 1980s with the establishment of

a two-tier banking system, composed of the Central bank responsible for carrying out the

monetary policy, and five large state-owned specialized banks dealing with deposit collecting

and money lending. Most authors argue that by the end of the 1990s three major types of

banks developed in Russia: joint-venture banks, domestic commercial banks, and the so-

named ‘zero’ or ‘wildcat’ banks. The last were formed by their shareholders - in most cases

groups of public institutions and/or industrial firms (the so called Financial Industrial Groups

(FIGs) - with the major purpose to finance their own non-financial businesses. As a result of

the low capital requirements and practically nonexistent bank regulation, the number of these

new banks grew rapidly and as early as January 1, 1996, Russia had 2,598 banks2, of which

the great majority (in number) was constituted of the ‘zero’ banks.

The banking system adopted a German-type structure with banks being allowed to hold

substantial stakes in non-financial firms. At the same time, through cross-shareholdings the

Russian firms literally owned the banks they borrowed from, thus ‘giving new meaning to

the concept of ‘insider’ lending’ 3(Bernstam and Rabushka, 1998). Such lending practices

worked well because the government underwrote the implicit debt created by enterprise

banks making risky loans to themselves. In addition to this, in the early reform stage the

government-directed credits dominated money lending; thus, the banks’ main function was to

borrow money from the Central Bank of Russia (CBR) at subsidized rates and then channel

the finances to designated enterprises, the last being in most cases the de facto owners of the

banks. The overall effect of this situation was, regarding the enterprise sector, that many new

enterprises were left out with extremely limited access to funds, and, concerning the bank

2 Source: Central Bank of Russia, http://www.cbr.ru

3 One may argue that the banks’ holding in non-financial firms in Russia were not concentrated enough; rather it was the case that firms owned outright the banks they borrowed from. This is one of the reasons why some authors raise the question whether the system adopted was of a German-type at all (see e.g. Popov, 1999). I shall briefly discuss this argument later on.

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sector, it implied high risk exposures as banks were subject to risk both as creditors to the

industries and as shareholders in them. Moreover, there was an added source of risk to banks

since, at least theoretically, the banks bear the risk of government-directed credit to

enterprises.

In addition, the macroeconomic situation in the early 1990s was characterized by extremely

high inflation rates and thus, negative interest rates (e.g. in 1992-1993 the real interest rates

were -93%; in 1994 through early 1995 -40% before finally turning positive for time deposits

during the second half of 19954). As a result, the amount of total credit to enterprises

dramatically dropped during this period; in 1991 the share of credits to enterprises comprised

31% of GDP, while in 1995 the banking system had a book value of loans to enterprises of

$26 billion, representing 8.1% of GDP (see Appendix no 1). All these factors taken together

led to a rapid growth of overdue credit: as shown in Appendix no 2 by the end of 1995 one

third of the total bank loans were non-performing, a share amounting to almost 3% of GDP.

Equally important, long-term credits amounted to around 5% of total bank loans; in other

words, banks focused mainly on short-term money lending (which, taking into consideration

the high level of uncertainty had a relative advantage as compared to long term money

lending).

The above described characteristics of the Russian banking sector in the first half of the

1990s highlight the difficult macroeconomic situation in which a German-like model of

universal banks was introduced. And even in this initial stage, one has enough grounds to

question the feasibility of this decision, for instead of a clear inflation history – an absolutely

necessary pre-condition for the introduction of a German-type banking system, Russia had

experienced extremely high, persistent inflation rates and a great macroeconomic instability.

Moreover, some authors argue that banks shareholding in non-financial firms was rare (see

e.g. Popov, 1999) thus, it did not reach a sufficient level of concentration that would allow

the mechanism proposed by Gerschenkron to work. Introducing a German-type of banking

system in Russia, therefore, seems not to be an outcome of a well-thought strategy by the

4 Source: Central Bank of Russia, http://www.cbr.ru

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policy makers, but unfortunately, as seen by most observers, a result of regulatory capture by

some influential private interests.

Still, many authors claim that given Russia’s background, the chosen system of close bank-

enterprise relationships was optimal and that banks played a major role in facilitating

investment (Perotti, Gelfer, 1998). In this respect, the next section of the paper will focus on

providing empirical evidence on the bank-enterprise relationships in Russia and on assessing

the relevance of the chosen bank model for Russia’s economy in the early transition stage. In

particular, two major questions will be raised: 1) how did the close bank-enterprise

relationship affect (if at all) the distribution of bank credit and the decisions of the

enterprises; and most importantly, 2) did this model play the role of an instrument to boost

firms’ investment as believed by Gerschenkron.

2. Empirical evidence for the bank-enterprise relationships

As already mentioned, due to various factors the Russian banking system experienced

extremely high levels of bad credits – a situation not distinctive for Russia but rather

common for most transition economies. In such circumstances, one of the most important

bank’s right as a creditor, is the right to repossess collateral in case of a debtor’s failure to

repay. However, a study on Russia’s banking sector executed by Fan, Lee and Schaffer

(1996) provides surprising results in this regard: no matter that in principle, most bank loans

in Russia are short-term and collateralized, in practice, regardless of the huge number of

cases when firms fail to duly serve the credits, banks have taken no actions towards

repossession of collateral; instead, a regular practice is capitalization of interest and

rescheduling of the principal. These findings provide strong evidence that Russian banks are

too soft in their dealings with enterprises, thus giving rise to a severe moral hazard problem

for even a healthy bank that is able to duly serve its debt would have incentives to deviate.

One possible explanation for the softness of the banking system comes from the fact that

banks are large investors in the industries they finance, i.e. that it is the implementation of a

model with tied bank-enterprise relations that is to be held responsible for the problem. In

13

order to further investigate the issue Fan et al. examine the bank-enterprise relationships and

the impact of these relationships on credit provision. Somewhat surprisingly, the authors find

no evidence that a bank shareholding in an enterprise translates to an easier access to credit,

neither do the results imply that enterprise ownership in the bank significantly affects the

easiness of obtaining a bank loan. Thus, they conclude, the results suggest the presence of

adverse selection in the Russian credit market, i.e. the problem comes from the fact that

many badly-performing firms are borrowers.

Another direction of thought, suggests that it is possible that bank-enterprise links are such

that banks’ rights regarding Russian industrial firms are much more protected in their

capacity as shareholders rather than as creditors. Findings of Fan et al. with respect to this

hypothesis suggest that banks’ shareholding in enterprises is a good indicator of bank

influence on enterprise decisions as significantly higher fraction of enterprises with some

bank shareholding indicates the shareholding bank influences their decisions (especially with

respect to financial matters), as compared to enterprises with no equity shareholding by

banks. Thus, evidence confirms the notion that, in general, banks as creditors have much too

little influence on enterprises; however, they do have a strong impact on the financial

decisions of firms they own shares in.

Regarding the second question of interest, I will first focus on the empirical work of Perotti

and Gelfer (1998), who study the role Russian FIGs play for firms’ corporate governance and

investment. Comparing firms members of the Russian FIGs and/or owned by banks on the

one hand, and a control group of independent firms on the other, the authors find evidence

that investment is sensitive to internal liquidity (measured as cash flow) for the second type

of firms, while the group-firms are less dependant on internal funds to finance investment

expenditures. The possible interpretation of this finding could be sought in two directions:

one feasible view suggests that FIG firms do a better reallocation of resources within the

group through their internal capital markets in order to finance profitable projects;

alternatively, one may argue that rather than providing entrepreneurial expertise and capital,

FIGs reallocate finances among the member-enterprises in order to serve private benefits of

14

the controlling shareholders, in other words, well-performing, profitable enterprises are used

as ‘cash cows’.

In order to test these opposing hypotheses, Perotti and Gelfer compare the quality of

investment in FIGs and bank-owned firms and individual firms via using a basic regression

of individual firms’ investment on a proxy for Tobin’s Q (Q being a sufficient a sufficient

statistic for investment). Furthermore, following Johnson (1997) the authors distinguish

between bank-led groups and industry-centered groups in view of their structural differences,

and presumably the different type of behavour of these groups. The results confirm the high

degree of redistribution of financial resources among the group, but at the same time the

authors still interpret them more as a proof the positive role played by the bank-led Financial-

Industry Groups in terms of influencing the quality of investment (since investment decision

is much more driven by the expected profitability of investment and not that much by the

availability of internal funds), while they refrain from giving a definitive answer about the

extent to which redistribution was driven by private benefits.

Hence, the empirical evidence provides no clear view on the role played by the bank- and

industry-based groups in Russia; still, most economists continue to believe that in the end,

the banking structure in Russia allowed banks to simply redistribute financial resources: from

the CBR to favored industries, as well as, within the groups from one firm to another, this

way serving mostly private benefits (see e.g. Perotti, 1998). Of course, there is no doubt that

these groups to a certain extent facilitated investment and provided corporate governance,

thereby playing an important role in Russia’s economic development, but this role was rather

controversial. Moreover, the difficulty in assessing the true role played by the close bank-

enterprise links based on the empirical evidence provided comes especially from the fact that

the German-type model of universal banks did not bring observable economic improvement

of the Russian economic performance, neither did it lead to any improvement in the living

standard.

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Conclusions

The main conclusion that could be derived from this study is that the applicability of the

German-type model of universal banks crucially depends on the presence of certain pre-

conditions, probably the most import of which are macroeconomic stability and low inflation

rates. It also calls for policy makers to carefully analyze all the possible impacts of the

introduction of such a model in important aspects of the reforms like privatization and

enterprise restructuring. And, while most transition countries started their banking sector

restructuring rather cautiously via introducing numerous restrictive bank regulations and

gradual liberalization, Russia literally ‘jumped’ into universal-type of banking system.

Moreover, this happened in a situation characterized by extremely high levels of inflation and

macroeconomic instability. Introducing a German-type of banking system in a situation

which implied infeasibility of this model had considerable implications both for the banking

systems and the enterprise sector, leading to rather contradictory results in terms of

investment and growth. The introduction of the German model in the post-communist

economies before the establishment of all the necessary conditions can, therefore, be

summarized using the words of Enrico Perotti to characterise Russia’s banking sector as an

‘[…] attempt to leapfrog the intermediate stages of financial development […]’.

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References

Bernstam, M., Rabushka, A., 1998, ‘The Nonmonetary System and the Ersatz Banking System in Russia: 1991–1995’ in ‘Fixing Russia's Banks: A Proposal to Growth’, Chapter 2, Hoover Institution Press

Cameron, R., 1972, ‘Banking and Economic Development’, New York, London: Oxford University Press

Fan, Q., Lee, U. and Schaffer, M., 1996, ‘Firms, Banks and Credit in Russia’ in ‘Enterprise Restructuring and Economic Policy in Russia’, eds. Commander, S., Fan, Q. and Schaffer, M., The World Bank

Grosfeld, I., 1994, ‘Comparing Financial Systems: Problems of Information and Control in Economies in Transition’, CASE Research Foundation, Warsaw

Mayer, C., ‘New Issues in Corporate Finance’, European Economic Review, 1988

Perotti, E. and Gelfer, S., 1998, ‘Investment Financing in Russian Financial-Industrial Groups’, CASE-CEU Working Papers Series

Perotti, E., ‘CEPR Policy Paper 9: Lessons from the Russian Meltdown: The Economics of Soft Legal Constraints’, 1998

Popov, V., 1999, ‘The Financial System in Russia Compared to Other Transition Economies: The Anglo-American versus the German-Japanese Model’, Comparative Economic Studies

Rostowski, J., 1998, ‘Universal Banking and Economic Growth in Post-Communist Economies’ in ‘Macroeconomic Instability in Post-Communist Countries’, Chapter 13, Oxford University Press

Central Bank of Russia, http://www.cbr.ru

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