DP1174 | Russian Enterprises in Transition

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The paper examines the behaviour of 100 firms interviewed regularly between 1993-4. It reaches the following conclusions:1) Following the inter-enterprise debt (IED) crisis of 1992, most firms have switched to a `pay-in-advance' system, which pushed firms towards a `hard budget constraint' economy, far away from what they were used to. As a result, the pressure to diversify suppliers, customers and products has been very strong.2) Wage earners have most often played the role of `residual claimants', unpaid in harsh times, and benefiting from luck or good management of their firms when things go well. This is not related to the shareholder structure of the firms but to the poor functioning of the labour markets.3) The structure of bank portofolios is essentially junk, and one must fear that a stabilization of the inflation rate will bring a collapse of many insolvent banks.