Finance Capitalism in Industrializing Autocracies: Evidence from Corporate Balance Sheets in Imperial Germany and Russia

Russia and Germany both industrialized later than England and the United States, and both countries retained authoritarian autocracies until World War I. But the two countries diverged in their regulation of industrial corporations during the mid-19th century, with Russia retaining strict controls via its concession system and Germany instituting nearly free incorporation. Based on a large collection of firm-level balance sheets, this paper presents new evidence revealing the likely impact of these systematic disparities on emerging industry’s access to capital. Contrary to the standard “economic backwardness†and “law and finance†literatures, we argue that authoritarian control of corporate entry significantly impeded the emergence of finance capitalism in Russia compared to the liberalized corporate financial system in Germany.