Financial Crisis, Economic Recovery, and Banking Development in Russia, Ukraine and Other FSU Countries

37 Pages Posted: 15 Feb 2006

See all articles by Haizhou Huang

Haizhou Huang

International Monetary Fund (IMF)

Dalia Marin

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Chenggang Xu

University of Hong Kong

Multiple version iconThere are 2 versions of this paper

Date Written: June 2004

Abstract

This paper provides a unified analysis for the onset of the 1998 financial crisis and the strong economic recovery afterward in Russia and other former Soviet Union countries. Before the crisis a banking failure arose owing to the coexistence of a lemons credit market and high government borrowing. In a lemons credit market low credit risk firms switched from bank to nonbank finance, including trade credits and barter trade, generating an externality on banks` interest rates. The collapse of the treasury bills market in the financial crisis triggered a change in banks` lending behavior, providing initial conditions for banking development.

Keywords: banking development, institutional trap, financial crisis

JEL Classification: G3, G21, P34, O16, D82

Suggested Citation

Huang, Haizhou and Marin, Dalia and Xu, Chenggang, Financial Crisis, Economic Recovery, and Banking Development in Russia, Ukraine and Other FSU Countries (June 2004). IMF Working Paper No. 04/105, Available at SSRN: https://ssrn.com/abstract=878929

Haizhou Huang (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Dalia Marin

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany
+49 89 2180 2446 (Phone)
+49 89 2180 6227 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Chenggang Xu

University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

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