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

Author/Editor:

Chenggang Xu ; Dalia Marin ; Haizhou Huang

Publication Date:

June 1, 2004

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 04/105

Subject:

English

Publication Date:

June 1, 2004

ISBN/ISSN:

9781451852851/1018-5941

Stock No:

WPIEA1052004

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

37

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