The re-emergence of popular credit in Russia : a sign of economic development?

This paper is an historical exploration of popular financial behavior in Russia, from 1861 to the present. The author seeks to understand historical and contemporary linkages between popular access to credit and levels of economic development, with a focus on the expansion of credit in the pre-World War I era, black markets in the Soviet period, and the leap in consumer credit over just the last five years. The role of financial intermediation in economic development is discussed, both in theory and within the context of the case study of Russia. The author concludes that when financial intermediation is greater, i.e., when popular access to credit is more widespread, levels of economic development are generally higher. However, the financial system is acted on and influenced by actors in the rest of the macro-economy. Thus, successful financial institutions are a necessary, though not sufficient, condition for economic development in the Russian case.