DP2258 Barter in Russia: Liquidity Shortage Versus Lack of Restructuring
|Author(s):||Sophie Brana, Mathilde Maurel|
|Publication Date:||October 1999|
|Keyword(s):||Barter, Non-Monetary Transactions, Russia, Transition, Virtual Economy|
|JEL(s):||C22, C23, E5, P2|
|Programme Areas:||Transition Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=2258|
Barter in Russia can be explained by firms' liquidity constraint: it is strongly correlated with financial tightness. However, a microeconomic analysis reveals that the rationale behind this liquidity constraint is different according to the firm situation. For firms in a good economic situation, but faced with adverse selection problems and having no access to bank credit, barter acts as a substitute for short-term credit. While for indebted firms, barter, in the same way as external finance, is a way of avoiding costly restructuring.