Discussion paper

DP2258 Barter in Russia: Liquidity Shortage Versus Lack of Restructuring

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.

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Citation

Maurel, M (1999), ‘DP2258 Barter in Russia: Liquidity Shortage Versus Lack of Restructuring‘, CEPR Discussion Paper No. 2258. CEPR Press, Paris & London. https://cepr.org/publications/dp2258