DP2258 | Barter in Russia: Liquidity Shortage Versus Lack of Restructuring

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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.