Capture of Bankruptcy: Theory and Russian Evidence

CEFIR Working Paper No. 3

35 Pages Posted: 15 Dec 2000 Last revised: 19 Dec 2009

See all articles by Adriane Lambert Mogiliansky

Adriane Lambert Mogiliansky

Ecole Nationale des Ponts et Chaussées (ENPC) - Centre d'Enseignement et de Recherche en Analyse Socio-Economique (CERAS); New Economic School (NES)

Konstantin Sonin

University of Chicago - Harris Public Policy; Higher School of Economics; Centre for Economic Policy Research (CEPR)

Ekaterina Zhuravskaya

Paris School of Economics (PSE)

Date Written: June 18, 2003

Abstract

Laws that work well in a country with the rule of law may produce unexpected outcomes in a corrupt environment. We argue that the Russian legal system is impaired by the capture of regional divisions of arbitrage courts, and analyze the consequences of this capture. Using a theoretical model and an empirical analysis, we conclude the following: first, governors in alliance with managers of large regional enterprises use bankruptcy to expropriate the federal government and outside investors; and second, the bankruptcy law does not put pressure on mangers to restructure, instead, it may even prevent restructuring.

Suggested Citation

Mogiliansky, Adriane Lambert and Sonin, Konstantin and Zhuravskaya, Ekaterina, Capture of Bankruptcy: Theory and Russian Evidence (June 18, 2003). CEFIR Working Paper No. 3. Available at SSRN: https://ssrn.com/abstract=253334 or http://dx.doi.org/10.2139/ssrn.253334

Adriane Lambert Mogiliansky

Ecole Nationale des Ponts et Chaussées (ENPC) - Centre d'Enseignement et de Recherche en Analyse Socio-Economique (CERAS)

28, rue des Saints-Peres
75007 Paris
France

New Economic School (NES)

100A Novaya Street
Moscow, Skolkovo 143026
Russia

Konstantin Sonin

University of Chicago - Harris Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Higher School of Economics ( email )

20 Myasnitskaya street
Moscow, 119017
Russia

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Ekaterina Zhuravskaya (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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