Financial Globalization and the Russian Crisis of 1998
Russia had more-or-less completed the privatization of its manufacturing and natural resource sectors by the end of 1997. And in February 1998, the annual inflation rate at last dipped into the single digits. Privatization should have helped with s...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100517152914 http://hdl.handle.net/10986/3797 |
| id |
okr-10986-3797 |
|---|---|
| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCOUNTING ACCOUNTING STANDARDS ARBITRAGE ARREARS ASSET QUALITY AUCTION AUCTIONS BAILOUT BAILOUTS BALANCE SHEET BALANCE SHEETS BALANCE-OF-PAYMENTS CRISES BANK DEBT BANK DEPOSITS BANK PORTFOLIOS BANK SUPERVISION BANKING CRISIS BANKING SYSTEM BANKRUPTCY BASIS POINTS BENCHMARK BONDS BID BOND BOND SPREAD BOND SPREADS BORROWING COSTS BROAD MONEY BUDGET CONSTRAINTS CAPITAL ACCOUNT CAPITAL ALLOCATION CAPITAL FLOW CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKETS CASH SETTLEMENTS CENTRAL BANK COLLATERAL COMMERCIAL BANK COMMERCIAL BANKS CONSUMER GOODS CORPORATE BONDS CORPORATE GOVERNANCE COUPON CREDIBILITY CREDIT RISKS CREDIT SPREADS CREDIT SQUEEZE CREDITORS CRISIS COUNTRIES CURRENCY CURRENCY CRISIS CURRENCY DEPRECIATION CURRENCY MISMATCHES CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT SURPLUS CURRENT ACCOUNT SURPLUSES DEBT BURDEN DEBT FINANCING DEBT INSTRUMENTS DEBT OBLIGATIONS DEBT OUTSTANDING DEBT PAYMENTS DEBT RESTRUCTURING DEBT SWAPS DEFAULT RISK DEPOSIT DEPOSITORS DEPOSITS DERIVATIVES DEVALUATION DEVELOPING COUNTRIES DIRECTED CREDITS DISBURSEMENT DOLLAR DEBT DOMESTIC CREDIT DOMESTIC CURRENCY DOMESTIC INTEREST RATE DOMESTIC INTEREST RATES EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS ENTERPRISE OPERATIONS EUROBOND EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORTERS EXTERNAL DEBT EXTERNAL DEBTS EXTERNAL FUNDING FACE VALUE FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE SYSTEM FINANCIAL CRISIS FINANCIAL LIBERALIZATION FINANCIAL MANAGEMENT FINANCIAL STABILITY FINANCIAL SUPPORT FINANCIAL SYSTEM FISCAL DEFICIT FISCAL DEFICITS FISCAL POLICY FIXED EXCHANGE RATE FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY DEBT FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN INTEREST FOREIGN PORTFOLIO INVESTMENT FORGIVENESS FUND MANAGERS GLOBALIZATION GOVERNMENT BORROWING GOVERNMENT DEBT GOVERNMENT DEBT MARKET GOVERNMENT FINANCING GOVERNMENT PAPER GOVERNMENT SECURITIES GROSS DOMESTIC PRODUCT HEDGE FUND HEDGE FUNDS HOLDINGS IMPLICIT SUBSIDIES IMPLICIT SUBSIDY INDEBTEDNESS INFLATION INFLATION RATE INTEREST DIFFERENTIAL INTEREST PAYMENTS INTERNATIONAL BANK INTERNATIONAL BOND INTERNATIONAL BOND MARKETS INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL INSTITUTIONS INTERNATIONAL SETTLEMENTS INVESTING LIQUID ASSETS LIQUIDATION LIQUIDITY LOAN LOAN REPAYMENTS LOAN SIZE LONG-TERM CAPITAL MACROECONOMIC CRISES MACROECONOMIC ENVIRONMENT MACROECONOMIC INSTABILITY MACROECONOMIC STABILITY MACROECONOMIC STABILIZATION MARKET ACCESS MARKET ECONOMY MARKET PARTICIPANTS MARKET VALUE MARKET YIELD MATURITIES MONETARY POLICY MONEY MANAGER MONEY MANAGERS MORAL HAZARD NON-PERFORMING LOANS NONPAYMENTS OIL PRICE OIL PRICES OUTPUT LOSS OUTSIDE INVESTORS OUTSTANDING STOCK PENSION PENSION FUNDS PHYSICAL ASSETS POLITICAL RISK PORTFOLIO PORTFOLIO FLOWS PORTFOLIO INFLOWS PORTFOLIOS PRICE CHANGES PRIMARY DEALERS PRIVATE BANKS PRIVATE CAPITAL PRIVATE CAPITAL INFLOWS PRIVATE INVESTORS PROMISSORY NOTES PUBLIC DEBT PUBLIC FINANCES REAL EXCHANGE RATE REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES RENEGOTIATION REPO REPOS RESERVES RETURN RETURNS RISK MANAGEMENT SAVINGS BANK SECONDARY MARKET SHORT-TERM EXTERNAL DEBT SHORT-TERM INTEREST RATES SOLVENCY SOVEREIGN BONDS SOVEREIGN DEBT SOVEREIGN DEBT PROBLEMS SOVEREIGN LIABILITY SOVEREIGN RISK STOCK EXCHANGE STOCK MARKET STOCK MARKETS SWAP SWAPS TAX TAX COLLECTIONS TAX EXEMPTIONS TAX POLICY TAX RATE TOTAL DEBT TRADING TRANCHES TRANSITION COUNTRIES TRANSITION ECONOMIES TREASURY TREASURY BILL TREASURY BILLS TREASURY NOTE UNDERLYING ASSETS |
| spellingShingle |
ACCOUNTING ACCOUNTING STANDARDS ARBITRAGE ARREARS ASSET QUALITY AUCTION AUCTIONS BAILOUT BAILOUTS BALANCE SHEET BALANCE SHEETS BALANCE-OF-PAYMENTS CRISES BANK DEBT BANK DEPOSITS BANK PORTFOLIOS BANK SUPERVISION BANKING CRISIS BANKING SYSTEM BANKRUPTCY BASIS POINTS BENCHMARK BONDS BID BOND BOND SPREAD BOND SPREADS BORROWING COSTS BROAD MONEY BUDGET CONSTRAINTS CAPITAL ACCOUNT CAPITAL ALLOCATION CAPITAL FLOW CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKETS CASH SETTLEMENTS CENTRAL BANK COLLATERAL COMMERCIAL BANK COMMERCIAL BANKS CONSUMER GOODS CORPORATE BONDS CORPORATE GOVERNANCE COUPON CREDIBILITY CREDIT RISKS CREDIT SPREADS CREDIT SQUEEZE CREDITORS CRISIS COUNTRIES CURRENCY CURRENCY CRISIS CURRENCY DEPRECIATION CURRENCY MISMATCHES CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT SURPLUS CURRENT ACCOUNT SURPLUSES DEBT BURDEN DEBT FINANCING DEBT INSTRUMENTS DEBT OBLIGATIONS DEBT OUTSTANDING DEBT PAYMENTS DEBT RESTRUCTURING DEBT SWAPS DEFAULT RISK DEPOSIT DEPOSITORS DEPOSITS DERIVATIVES DEVALUATION DEVELOPING COUNTRIES DIRECTED CREDITS DISBURSEMENT DOLLAR DEBT DOMESTIC CREDIT DOMESTIC CURRENCY DOMESTIC INTEREST RATE DOMESTIC INTEREST RATES EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS ENTERPRISE OPERATIONS EUROBOND EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORTERS EXTERNAL DEBT EXTERNAL DEBTS EXTERNAL FUNDING FACE VALUE FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE SYSTEM FINANCIAL CRISIS FINANCIAL LIBERALIZATION FINANCIAL MANAGEMENT FINANCIAL STABILITY FINANCIAL SUPPORT FINANCIAL SYSTEM FISCAL DEFICIT FISCAL DEFICITS FISCAL POLICY FIXED EXCHANGE RATE FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY DEBT FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN INTEREST FOREIGN PORTFOLIO INVESTMENT FORGIVENESS FUND MANAGERS GLOBALIZATION GOVERNMENT BORROWING GOVERNMENT DEBT GOVERNMENT DEBT MARKET GOVERNMENT FINANCING GOVERNMENT PAPER GOVERNMENT SECURITIES GROSS DOMESTIC PRODUCT HEDGE FUND HEDGE FUNDS HOLDINGS IMPLICIT SUBSIDIES IMPLICIT SUBSIDY INDEBTEDNESS INFLATION INFLATION RATE INTEREST DIFFERENTIAL INTEREST PAYMENTS INTERNATIONAL BANK INTERNATIONAL BOND INTERNATIONAL BOND MARKETS INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL INSTITUTIONS INTERNATIONAL SETTLEMENTS INVESTING LIQUID ASSETS LIQUIDATION LIQUIDITY LOAN LOAN REPAYMENTS LOAN SIZE LONG-TERM CAPITAL MACROECONOMIC CRISES MACROECONOMIC ENVIRONMENT MACROECONOMIC INSTABILITY MACROECONOMIC STABILITY MACROECONOMIC STABILIZATION MARKET ACCESS MARKET ECONOMY MARKET PARTICIPANTS MARKET VALUE MARKET YIELD MATURITIES MONETARY POLICY MONEY MANAGER MONEY MANAGERS MORAL HAZARD NON-PERFORMING LOANS NONPAYMENTS OIL PRICE OIL PRICES OUTPUT LOSS OUTSIDE INVESTORS OUTSTANDING STOCK PENSION PENSION FUNDS PHYSICAL ASSETS POLITICAL RISK PORTFOLIO PORTFOLIO FLOWS PORTFOLIO INFLOWS PORTFOLIOS PRICE CHANGES PRIMARY DEALERS PRIVATE BANKS PRIVATE CAPITAL PRIVATE CAPITAL INFLOWS PRIVATE INVESTORS PROMISSORY NOTES PUBLIC DEBT PUBLIC FINANCES REAL EXCHANGE RATE REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES RENEGOTIATION REPO REPOS RESERVES RETURN RETURNS RISK MANAGEMENT SAVINGS BANK SECONDARY MARKET SHORT-TERM EXTERNAL DEBT SHORT-TERM INTEREST RATES SOLVENCY SOVEREIGN BONDS SOVEREIGN DEBT SOVEREIGN DEBT PROBLEMS SOVEREIGN LIABILITY SOVEREIGN RISK STOCK EXCHANGE STOCK MARKET STOCK MARKETS SWAP SWAPS TAX TAX COLLECTIONS TAX EXEMPTIONS TAX POLICY TAX RATE TOTAL DEBT TRADING TRANCHES TRANSITION COUNTRIES TRANSITION ECONOMIES TREASURY TREASURY BILL TREASURY BILLS TREASURY NOTE UNDERLYING ASSETS Pinto, Brian Ulatov, Sergei Financial Globalization and the Russian Crisis of 1998 |
| geographic_facet |
Europe and Central Asia Europe and Central Asia Europe Eastern Europe Commonwealth of Independent States Asia Russian Federation |
| relation |
Policy Research working paper ; no. WPS 5312 |
| description |
Russia had more-or-less completed the
privatization of its manufacturing and natural resource
sectors by the end of 1997. And in February 1998, the annual
inflation rate at last dipped into the single digits.
Privatization should have helped with stronger
micro-foundations for growth. The conquest of inflation
should have cemented macroeconomic credibility, lowered real
interest rates, and spurred investment. Instead, Russia
suffered a massive public debt-exchange rate-banking crisis
just six months later, in August 1998. In showing how this
turn of events unfolded, the authors focus on the
interaction among Russia's deteriorating fiscal
fundamentals, its weak micro-foundations of growth and
financial globalization. They argue that the expectation of
a large official bailout in the final 10 weeks before the
meltdown played an important role, with Russia's
external debt increasing by $16 billion or 8 percent of
post-crisis gross domestic product during this time. The
lessons and insights extracted from the 1998 Russian crisis
are of general applicability, oil and geopolitics
notwithstanding. These include a discussion of when
financial globalization might actually hurt and a cutoff in
market access might actually help; circumstances in which an
official bailout could backfire; and why financial
engineering tends to fail when fiscal solvency problems are present. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Pinto, Brian Ulatov, Sergei |
| author_facet |
Pinto, Brian Ulatov, Sergei |
| author_sort |
Pinto, Brian |
| title |
Financial Globalization and the Russian Crisis of 1998 |
| title_short |
Financial Globalization and the Russian Crisis of 1998 |
| title_full |
Financial Globalization and the Russian Crisis of 1998 |
| title_fullStr |
Financial Globalization and the Russian Crisis of 1998 |
| title_full_unstemmed |
Financial Globalization and the Russian Crisis of 1998 |
| title_sort |
financial globalization and the russian crisis of 1998 |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100517152914 http://hdl.handle.net/10986/3797 |
| _version_ |
1764388399027847168 |
| spelling |
okr-10986-37972021-04-23T14:02:12Z Financial Globalization and the Russian Crisis of 1998 Pinto, Brian Ulatov, Sergei ACCOUNTING ACCOUNTING STANDARDS ARBITRAGE ARREARS ASSET QUALITY AUCTION AUCTIONS BAILOUT BAILOUTS BALANCE SHEET BALANCE SHEETS BALANCE-OF-PAYMENTS CRISES BANK DEBT BANK DEPOSITS BANK PORTFOLIOS BANK SUPERVISION BANKING CRISIS BANKING SYSTEM BANKRUPTCY BASIS POINTS BENCHMARK BONDS BID BOND BOND SPREAD BOND SPREADS BORROWING COSTS BROAD MONEY BUDGET CONSTRAINTS CAPITAL ACCOUNT CAPITAL ALLOCATION CAPITAL FLOW CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKETS CASH SETTLEMENTS CENTRAL BANK COLLATERAL COMMERCIAL BANK COMMERCIAL BANKS CONSUMER GOODS CORPORATE BONDS CORPORATE GOVERNANCE COUPON CREDIBILITY CREDIT RISKS CREDIT SPREADS CREDIT SQUEEZE CREDITORS CRISIS COUNTRIES CURRENCY CURRENCY CRISIS CURRENCY DEPRECIATION CURRENCY MISMATCHES CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT SURPLUS CURRENT ACCOUNT SURPLUSES DEBT BURDEN DEBT FINANCING DEBT INSTRUMENTS DEBT OBLIGATIONS DEBT OUTSTANDING DEBT PAYMENTS DEBT RESTRUCTURING DEBT SWAPS DEFAULT RISK DEPOSIT DEPOSITORS DEPOSITS DERIVATIVES DEVALUATION DEVELOPING COUNTRIES DIRECTED CREDITS DISBURSEMENT DOLLAR DEBT DOMESTIC CREDIT DOMESTIC CURRENCY DOMESTIC INTEREST RATE DOMESTIC INTEREST RATES EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS ENTERPRISE OPERATIONS EUROBOND EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORTERS EXTERNAL DEBT EXTERNAL DEBTS EXTERNAL FUNDING FACE VALUE FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE SYSTEM FINANCIAL CRISIS FINANCIAL LIBERALIZATION FINANCIAL MANAGEMENT FINANCIAL STABILITY FINANCIAL SUPPORT FINANCIAL SYSTEM FISCAL DEFICIT FISCAL DEFICITS FISCAL POLICY FIXED EXCHANGE RATE FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY DEBT FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN INTEREST FOREIGN PORTFOLIO INVESTMENT FORGIVENESS FUND MANAGERS GLOBALIZATION GOVERNMENT BORROWING GOVERNMENT DEBT GOVERNMENT DEBT MARKET GOVERNMENT FINANCING GOVERNMENT PAPER GOVERNMENT SECURITIES GROSS DOMESTIC PRODUCT HEDGE FUND HEDGE FUNDS HOLDINGS IMPLICIT SUBSIDIES IMPLICIT SUBSIDY INDEBTEDNESS INFLATION INFLATION RATE INTEREST DIFFERENTIAL INTEREST PAYMENTS INTERNATIONAL BANK INTERNATIONAL BOND INTERNATIONAL BOND MARKETS INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL INSTITUTIONS INTERNATIONAL SETTLEMENTS INVESTING LIQUID ASSETS LIQUIDATION LIQUIDITY LOAN LOAN REPAYMENTS LOAN SIZE LONG-TERM CAPITAL MACROECONOMIC CRISES MACROECONOMIC ENVIRONMENT MACROECONOMIC INSTABILITY MACROECONOMIC STABILITY MACROECONOMIC STABILIZATION MARKET ACCESS MARKET ECONOMY MARKET PARTICIPANTS MARKET VALUE MARKET YIELD MATURITIES MONETARY POLICY MONEY MANAGER MONEY MANAGERS MORAL HAZARD NON-PERFORMING LOANS NONPAYMENTS OIL PRICE OIL PRICES OUTPUT LOSS OUTSIDE INVESTORS OUTSTANDING STOCK PENSION PENSION FUNDS PHYSICAL ASSETS POLITICAL RISK PORTFOLIO PORTFOLIO FLOWS PORTFOLIO INFLOWS PORTFOLIOS PRICE CHANGES PRIMARY DEALERS PRIVATE BANKS PRIVATE CAPITAL PRIVATE CAPITAL INFLOWS PRIVATE INVESTORS PROMISSORY NOTES PUBLIC DEBT PUBLIC FINANCES REAL EXCHANGE RATE REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES RENEGOTIATION REPO REPOS RESERVES RETURN RETURNS RISK MANAGEMENT SAVINGS BANK SECONDARY MARKET SHORT-TERM EXTERNAL DEBT SHORT-TERM INTEREST RATES SOLVENCY SOVEREIGN BONDS SOVEREIGN DEBT SOVEREIGN DEBT PROBLEMS SOVEREIGN LIABILITY SOVEREIGN RISK STOCK EXCHANGE STOCK MARKET STOCK MARKETS SWAP SWAPS TAX TAX COLLECTIONS TAX EXEMPTIONS TAX POLICY TAX RATE TOTAL DEBT TRADING TRANCHES TRANSITION COUNTRIES TRANSITION ECONOMIES TREASURY TREASURY BILL TREASURY BILLS TREASURY NOTE UNDERLYING ASSETS Russia had more-or-less completed the privatization of its manufacturing and natural resource sectors by the end of 1997. And in February 1998, the annual inflation rate at last dipped into the single digits. Privatization should have helped with stronger micro-foundations for growth. The conquest of inflation should have cemented macroeconomic credibility, lowered real interest rates, and spurred investment. Instead, Russia suffered a massive public debt-exchange rate-banking crisis just six months later, in August 1998. In showing how this turn of events unfolded, the authors focus on the interaction among Russia's deteriorating fiscal fundamentals, its weak micro-foundations of growth and financial globalization. They argue that the expectation of a large official bailout in the final 10 weeks before the meltdown played an important role, with Russia's external debt increasing by $16 billion or 8 percent of post-crisis gross domestic product during this time. The lessons and insights extracted from the 1998 Russian crisis are of general applicability, oil and geopolitics notwithstanding. These include a discussion of when financial globalization might actually hurt and a cutoff in market access might actually help; circumstances in which an official bailout could backfire; and why financial engineering tends to fail when fiscal solvency problems are present. 2012-03-19T18:39:59Z 2012-03-19T18:39:59Z 2010-05-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100517152914 http://hdl.handle.net/10986/3797 English Policy Research working paper ; no. WPS 5312 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper Europe and Central Asia Europe and Central Asia Europe Eastern Europe Commonwealth of Independent States Asia Russian Federation |