Russian Business Groups: Substitutes for Missing Institutions?
CEFIR Working Paper
16 Pages Posted: 20 Jun 2005 Last revised: 29 Mar 2013
Date Written: December 1, 2012
Numerous evidence demonstrate that firms affiliated with business groups in emerging markets outperform their independent counterparts. One of the proposed explanations for such a phenomenon is the more advanced groups' internal markets structure compared to the rest of the economy. In this paper we test the hypothesis that internal capital markets within Russian business groups overcome the liquidity constraints problem widely spread outside groups. Our findings indicate that even if the groups' internal capital markets do exist in Russian business groups, their efficiency is rather doubtful and the access to external financing by firms affiliated with the groups is constrained.
Keywords: Business groups, transition economy, cash sensitivity to cash
JEL Classification: G32, L22
Suggested Citation: Suggested Citation