Russian Societies of the Mutual Credit in the Years of Economic Recovery (1909–1913)

Abstract

Тhe article is dedicated to one of the poorly studied branches of the bank loan system in the Russian Empire, i.e. the mutual loan societies. While making investments in industry and sales turnover, mutual loan societies contributed to their widening scope by means of remote areas of the country. The most important factor to determine the peculiarities of mutual loan societies development was their bankruptcy during the economic recovery before World War I. That is why main focus is made on internal causes (that developed on the activity of the organization itself) of financial insolvency (bankruptcy) occurrence of mutual loan societies. They allowed show basic problems of mutual loan societies on the example of particular organizations, due to which the factors of crisis and financial insolvency (bankruptcy) risks appeared. The article reveals such inefficient strategies of mutual loan societies development and management as lack of real-life experience (qualifications of the staff), use of investors' finances for the administration personal needs (malpractice), inefficient management of the floating capital, poor loan policy connected with illegal profit withdrawal.