Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/186121
Authors: 
Lychakov, Nikita
Year of Publication: 
2018
Series/Report no.: 
QUCEH Working Paper Series 2018-11
Abstract: 
How can industrial policies lead to bank distress? In the 1890s, when undergoing rapid state-led industrialisation, the Russian Empire grew by foreign capital inflows into national debt and by state procurement of industrial output. Concurrently, state policies incentivised, but did not compel, commercial banks to finance industry. In 1899, the inflow of foreign capital fell sharply, initiating a financial crisis. Using newly-collected historical data and extensive narrative evidence, I find the banks which experienced greater distress in the crisis had more personal connections to the government officials who were close to the epicentre of policymaking. Moreover, these banks had more personal ties to the companies which had been most-stimulated by state policies to expand production. Taken together, these two findings suggest that national development policies had a destabilising impact on bank performance.
Subjects: 
financial crises
bank failures
development policies
political economy
Russia
JEL: 
G01
L5
O25
P16
Document Type: 
Working Paper
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