Financing Nascent Industry: Leverage, Politics, and Performance in Imperial Russia

51 Pages Posted: 22 Jan 2021

Date Written: March 8, 2020


This paper explores the dynamics of corporate finance during the early stages of industrial growth by examining a newly constructed panel database of Imperial Russian industrial corporations’ balance sheets. We document large differences in financial strategies and outcomes across industries, over time, over firms’ life cycles, and between two Russian corporation types. Russian corporations’ profits and dividend payouts followed the Russian business cycle. Russian corporate debt ratios mostly follow modern capital structure theories, but tangible assets were not associated with higher debt levels, suggesting that Russian corporate debt was short-term, that collateral was irrelevant, or that agency problems dominated. We also find evidence that investors needed to be compensated for poor protections, since dividends were valued and widely-held corporations enjoyed greater returns. While the evidence suggests the presence of these and other frictions, our findings are consistent with the Imperial Russian financial system functioning well enough to enable early industrial development.

JEL Classification: N23, N63, G32

Suggested Citation

Gregg, Amanda G. and Nafziger, Steven, Financing Nascent Industry: Leverage, Politics, and Performance in Imperial Russia (March 8, 2020). BOFIT Discussion Paper No. 7/2020, Available at SSRN: or

Amanda G. Gregg (Contact Author)

Middlebury College ( email )

Middlebury, VT 05753
United States

Steven Nafziger

Williams College ( email )

Williamstown, MA 01267
United States

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